Madison Square Garden Co. said its board of directors has approved the long-awaited split of its sports and entertainment assets, creating a media company dubbed MSG Networks Inc. and a sports and entertainment unit that will retain the Madison Square Garden Co. name.
The distribution will take place on Sept. 30 to MSG shareholders of record as of Sept. 21.
Madison Square Garden first announced its intention to split the company in October. As part of the split, its cable sports networks MSG Network, MSG + would be housed in the MSG Networks unit while its professional sports teams (including the New York Knicks and New York Rangers) and entertainment venues like Madison Square Garden, Radio City Music Hall, The Forum and the Chicago Theater would remain in the Madison Square Garden Co.
For the distribution, each MSG Class A common stockholder will receive one share of the new Madison Square Garden Company Class A common stock for every three shares of MSG Class A common stock held as of the record date. Each MSG Class B common stockholder will receive one share of the new Madison Square Garden Company Class B common stock for every three shares of MSG Class B common stock they hold as of the record date.
“We are now one step closer toward our goal of creating two distinct, focused companies for investors, said MSG CEO Doc O’Connor in a statement. “The live sports and entertainment company will comprise a portfolio of celebrated venues, legendary sports teams and exclusive entertainment productions, while the media company will continue to own and operate award-winning regional networks that deliver compelling sports and entertainment content. We are confident that this transaction will further enhance the long-term value potential of both companies as each continues to build on its considerable record of achievement.”
Upon completion of the spin-off, MSG’s current repurchase program, through which $241 million of MSG Class A common stock has already been purchased, will be terminated and the new Madison Square Garden Company will have in place new Board authorization to repurchase up to $525 million of its Class A common stock.
“Our anticipated stock buyback program for the new sports and entertainment company is a reflection of our confidence in the strength of those businesses, and of our continued desire to generate greater value for stockholders,” O’Connor said in a statement.
Statement containing details regarding the distribution of the new Madison Square Garden Company common stock and the new Madison Square Garden Company’s business and management following the spin-off will be mailed to MSG stockholders prior to the distribution date.
The spin-off has been structured to qualify as a tax-free distribution to MSG stockholders for U.S. federal income tax purposes. Cash received in lieu of fractional shares, however, will generally be taxable. MSG stockholders are urged to consult with their tax advisors with respect to the U.S. federal, state, local and foreign tax consequences of the spin-off.
Beginning on Sept. 17, and continuing until the occurrence of the distribution, MSG expects that its common stock will trade in two markets on the New York Stock Exchange: In the “regular way” market under the symbol “MSG” and under the current name, “The Madison Square Garden Company”, and in the "ex-distribution" market under the symbol "MSGN WI" and under the new name “MSG Networks Inc.”
The new Madison Square Garden Company Class A common stock is expected to begin trading on a “when-issued” basis on the NYSE under the symbol “MSG WI” and under the name “The Madison Square Garden Company” beginning on Sept. 17. "When issued" trading of the new Madison Square Garden Company Class A common stock will continue until the distribution occurs.
The completion of the spin-off is subject to the effectiveness of MSG’s Form 10, funding of the debt financing at MSG Networks and the new Madison Square Garden Company common stock being authorized for listing on the NYSE, as well as certain approvals and consents.