"American Idol" owner agrees to CEO-led buyout

LOS ANGELES (Reuters) - CKX Inc., the owner of rights to the

Elvis Presley and Muhammad Ali names and the "American Idol" television show, said it will be taken private in a $1.33 billion buyout led by its chief executive.

The shares of the New York-based company soared as much as 44 percent following the announcement.

Shareholders would receive $13.75 in cash and one share of FX Luxury Realty LLC for each share of CKX, the company said. FX Luxury is an affiliate of CEO Robert Sillerman that has real estate interests in Las Vegas, as well as licenses to use Elvis Presley's and Muhammad Ali's names in the development of real estate and attractions.

The cash portion of the offer represents a 29 percent premium to CKX's closing share price of $10.63 on Thursday. On Friday, the shares soared to a high of $15.34 before closing at $14.65 on Nasdaq.

But one shareholder already believes that price is not enough for the company. Levy Investments Ltd. sued CKX and its executives in New York Supreme Court on Friday, claiming the buyout offer is "grossly inadequate for CKX's shares and materially undervalues the Company."

The suit is seeking class action status.

As of March 31, CKX had about 97 million shares outstanding, according to a regulatory filing.

The management group involved in the deal includes "Idol" creator Simon Fuller, the company said in a statement.

The deal would be accomplished through a merger with 19X Inc., a private company owned by Sillerman and Fuller. It would be funded through a combination of equity and debt financing.

In the lawsuit, Levy Investments claims Sillerman and the other executives "are attempting to snatch the company from the public stockholders at a discount to its true value at a time when the Company's growth prospects are very bright."

The suit claimed the executives have breached their fiduciary duties by not fully informing themselves about other options for the company and whether it had obtained the highest possible price.

The suit also claims Sillerman, who already owns more than one-third of the company's shares, has made a sharp reversal in the last four months about whether CKX is best served as a public or privately-held company.

In a January interview with The Hollywood Reporter, Sillerman said he saw benefits to keeping the company public.

"There is actually a value in having a public currency," Sillerman said. "For the time being, we think that there is value. It does give us access to capital."

In a news release on Friday, Sillerman said the company wanted to go private so it could get capital to invest in "real estate and location-based attractions" for the names it owns.

Spokesmen from CKX could not be immediately reached for comment on the lawsuit.

(Reporting by Nichola Groom; additional reporting by Sreerupa Mitra in Bangalore and Emily Chasan in New York)