Warner Music Sold To Russian-Born Billionaire
Warner Music Group has been in the news a lot lately. Just last week, they were making deals with Apple for an upcoming cloud music service. Warner, which comprises notable labels like Atlantic and Reprise, has also been on the auction block for some time.
Earlier this week, news spread that the company, which is headed by Chairman and CEO Edgar Bronfman, Jr., had been in talks with a range of suitors, including Sony/ATV Publishing and Ronald Perelman. Today, Reuters first announced that Len Blavatnick, a billionaire businessman born in Russia who emigrated to the U.S. and made his fortune largely in the industrial sector, would buy the music giant for $3.3. billion.
Blavatnick’s company, Access Industries, will be paying $8.25 a share for the Warner Music Group Corp, which trades as a public company on the New York Stock Exchange. The company’s shares closed on Thursday at $7.90, though they have traded as low as $4.00 over the last year.
Of course, the sale of a major music record label to a private business group is reminiscent of Guy Hands and Terra Firma’s 2007 acquisition of EMI. That deal eventually led to Citigroup, which had been the main lender, taking back control of EMI, as Terra Firma was unable to sustain the acquisition under the existing debt load. Warner is reported to have around $2 billion in debt.
But, some see the sale of Warner Music in a positive light. EMusic, the music download service, signed Warner Music Group on as a partner in January 2010. Adam Klein, eMusic’s CEO, says he’s pleased with the deal.
“It most likely creates greater economic stability and better positions Warner Music Group to realign its operating costs around the ever changing realities of the digital music space,” says Klein. “We trust that the new owners understand and appreciate consumers’ new expectations of the digital music industry.”
Klein hints that there may be more deals of this nature. “This is just the beginning of the repositioning of the major music industry players,” he says.