Officiel: Warner Music Group vendu à Access Industries.
It's Official: Access Industries to Acquire Warner Music Group for $3.3 Billion
May 06, 2011
By Glenn Peoples and Ed Christman
Access Industries' winning bid for Warner Music Group will pay $8.25 per share in an all-cash deal, according to a joint press release issued Friday morning. The deal is for both Warner's recorded music and publishing divisions.
Shares of Warner rose to $8.04 in early Friday trading. They reached a 52-week high of $8.15 on Thursday before closing at $7.63.
According to a press release, Warner's board of directors approved the transaction and recommended that Warner's stockholders approve the transaction. The transaction is also subject to customary closing conditions and regulatory approvals. The companies expect the transaction will be completed in the third calendar quarter of this year.
A bid of $8.25 per share implies an enterprise value of roughly $3 billion (or roughly $3.3 billion if Warner's cash and cash equivalents are included, although the acquisition of cash effectively lowers the acquisition price). That figure includes a market value of roughly $1.28 billion, cash and cash equivalents of $263 million and long-term debt of $1.94 billion. The latter two figures are from the company's balance sheet for the period ending December 31, 2010.
Warner shares were trading around $5.80 in late March when Warner was attracting a multitude of bidders. Among the bidders to make the final cut were Access, a joint bid from Platinum Equity/The Gores Group and bids for Warner's separate divisions from Sony Music and Ron Perelman and Guggenheim Partners, Reuters reported.
The company's shares are up 40.32% year to date. The last time its shares were this high was September 2008. They reached $8.16 on September 24 before falling to $3.62 in one month later and reaching a low of $1.58 on March 3, 2009. At the time, investor sentiment was low after Warner had pulled its videos from YouTube in December 2008.
Access has secured committed financing from Credit Suisse and UBS Investment Bank. These funds, in addition to equity financing from Access, will finance the cash consideration to WMG's stockholders. The announcement on the deal did not provide a breakout of the financing, but earlier news reports suggest that the deal will be funded with $2 billion in debt and the remainder equity.
WMG's Chairman and CEO, Edgar Bronfman, Jr., said, "We believe this transaction is an exceptional value-maximizing opportunity that serves the best interests of stockholders as well as the best interests of music fans, our recording artists and songwriters, and the wonderful people of this company. We are delighted that Access will be the new steward of this outstanding business. They are supportive of the company's vision, growth strategy and artists, while bringing a fresh entrepreneurial perspective and expertise in technology and media. Most importantly, Access supports Warner Music's commitment to our recording artists and songwriters who are the foundation of our current and future success."
Len Blavatnik, Chairman and founder of Access Industries, said, "I am excited to extend my longstanding involvement with Warner Music. It is a great company with a strong heritage and home to many exceptional artists. I look forward to working closely with the many talented people within the company."
Access Industries is a privately held, U.S.-based industrial group with long-term holdings worldwide. Access was founded in 1986 by its Chairman, Len Blavatnik. Access' industrial focus spans three key sectors: natural resources and chemicals; telecommunications and media; and real estate.
In winning the auction, Access outbid at least 10 other suitors, including billionaires like Ron Burkle and his Yucaipa Companies and MacAndrews & Forbes' Ron Perelman.
Following the closing of the transaction, WMG will become a privately held company and its stock will no longer be traded on the New York Stock Exchange. The company will retain the Warner Music Group name and will continue to operate out of its current facilities.
Thomas H. Lee Partners L.P. and its affiliates, Bain Capital Partners, LLC and its affiliates, and Edgar Bronfman, Jr., who together hold approximately 56% of the company's outstanding shares, have entered into a voting agreement with Access under which those stockholders have agreed to vote their shares in favor of the merger.
Goldman, Sachs & Co. and AGM Partners LLC acted as financial advisors to WMG, and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as the company's legal advisors. Credit Suisse and UBS Investment Bank acted as financial advisors to Access, and Debevoise & Plimpton LLP acted as Access' legal advisors.
Warner Music being sold for $1.3B amid music drop
By RYAN NAKASHIMA, AP Business Writer – Fri May 6, 1:15 pm ET
LOS ANGELES – Warner Music Group Corp., the world's third-largest recording company with such artists as Eric Clapton, Michael Buble and Paramore, is being sold for about $1.3 billion as a global decline in CD sales weighs down the industry.
Len Blavatnik's Access Industries is paying $8.25 a share and will take about $1.9 billion in Warner debt.
The deal, announced by the companies Friday, comes as U.S. recorded music sales are half what they were about a decade ago. Gains in digital sales have started to flatten, and CD sales continue to fall.
That means Blavatnik will have to cut staff and other expenses further and hope that a new wave of innovation will carry digital music sales higher.
"I am excited to extend my longstanding involvement with Warner Music," Blavatnik, 53, said in a statement. "It is a great company with a strong heritage and home to many exceptional artists."
Blavatnik is a former board member who was part of the group that bought the company in 2004. He has about a 2 percent stake in the company.
The sale ends a seven-year run by investors led by Chief Executive Edgar Bronfman Jr., who purchased the company from Time Warner Inc. with private equity backing for $2.6 billion. Those investors slashed payrolls and took other measures to cope with music's decline. They took the company public a year later to help recoup their investment. There are now just 3,700 employees, down from 5,100 in late 2003.
The Russian-born Blavatnik will likely have to cut even more — so much so that billionaire Ron Burkle balked at pursuing the company past an initial round of bidding. Burkle worried that cuts might start to hurt Warner-signed artists he considers friends, such as Red Hot Chili Peppers, according to a person familiar with the matter. The person wasn't authorized to speak publicly and spoke on condition of anonymity.
Bronfman will remain CEO after the sale. Bronfman and Blavatnik declined interview requests ahead of the release of Warner's fourth-quarter earnings report Tuesday.
The fortunes of the music industry remain uncertain and last year, rising download sales were offset by the collapse in the popularity of ringtones.
The new owner may have to bank on new services yet to take off. There's speculation that Google Inc. is coming out with a music service and that Apple Inc. will unveil a subscription plan to complement sales of individual tracks on iTunes.
Further deal-making is possible. Citibank is looking to sell Britain's EMI Group Ltd., which it seized from Guy Hands' Terra Firma private equity group in February after it defaulted on a loan.
Other groups that lost out on bidding for Warner — including No. 2 music company Sony Corp. — are also looking for parts that may be discarded from this deal.
In one possible scenario, Warner's new owner would try to buy No. 4 EMI in order to reap the benefit of slashing staff at a combined company, and then shed certain music labels or get rid of one of the publishing divisions to satisfy antitrust regulators.
Vivendi SA's Universal Music Group, ranked No. 1, is also looking to buy parts of Warner, EMI or both.
The deal marks a profitable exit for Bronfman and private equity partners Thomas H. Lee and Bain Capital, who have agreed to vote their combined 56 percent stake in favor of the deal. Thanks to special dividends and management fees over the years, investors have gotten back their $1.05 billion investment, plus 30 percent more.
The sale, expected to close by September, adds to that.
"We believe this transaction is an exceptional value-maximizing opportunity that serves the best interests of stockholders as well as the best interests of music fans, our recording artists and songwriters, and the wonderful people of this company," said Bronfman in a statement.
The investors wanted to sell Warner Music quickly because of the pending sale of EMI.
"When you have two major companies that are trying to sell, that would have had an impact on prices," said Standard & Poor's equity analyst Tuna Amobi. "They're probably going to take this money and run."
Warner Music's stock rose 21 cents, or 2.7 percent, to $8.11 in midday trading Friday. It was just short of the $8.25 per share sale price, but near the high end of its 52-week range of $4 to $8.15.
Access buying Warner Music for $3.3 billion
– Fri May 6, 11:08 am ET
NEW YORK (AFP) – Russian-American billionaire Len Blavatnik's Access Industries is buying storied music company Warner Music Group for $3.3 billion in an all-cash transaction.
Warner Music, whose talent includes Eric Clapton, Kid Rock, Madonna, the Red Hot Chili Peppers and Green Day, is being sold by the private-equity firms and chief executive, Edgar Bronfman Jr. who bought the company from Time Warner in 2004 for $2.6 billion.
Access, which already holds a stake in Warner Music, said the sale includes record labels such as Asylum, Atlantic, Elektra, Rhino and Warner Bros. and the prized Warner/Chappell music-publishing division.
The purchase price of $8.25 per share is a 34.4 percent premium over Warner Music's average share price over the previous six months.
"We are delighted that Access will be the new steward of this outstanding business," Bronfman said in a statement. "They are supportive of the company's vision, growth strategy and artists, while bringing a fresh entrepreneurial perspective and expertise in technology and media.
"Most importantly, Access supports Warner Music's commitment to our recording artists and songwriters who are the foundation of our current and future success," he said.
Blavatnik, Access's chairman and founder, described Warner Music as a "great company with a strong heritage and home to many exceptional artists.
"I look forward to working closely with the many talented people within the company," the Russian-born industrialist said.
Jorg Mohaupt, Access's head of media, acknowledged the challenges faced by the music industry as it seeks to adapt to the digital age.
"The music industry is at an inflection point where digital adoption is rapidly gaining momentum," Mohaupt said. "Warner Music, as one of the most progressive forces in the music business, is well positioned to capture this opportunity for music creation and distribution."
The transaction has been approved by Warner Music's board of directors but will have to receive the green light from shareholders.
Thomas H. Lee Partners, Bain Capital Partners and Bronfman hold approximately 56 percent of Warner Music's outstanding shares.
The deal is expected to close in the third quarter of the year, when Warner Music will become a privately held company.
Besides such music royalty as Clapton and Madonna, Warner's catalog also includes such artists as Frank Sinatra, the Bee Gees, The Doors, Youssou N'Dour and REM.