BERTIE CUTS TO THE SHORT LIST FOR BMG SONGS BUYERS
Bertelsmann has whittled down the list of potential buyers for the publishing unit from 15 to five, in hopes of making a deal by late September. The company is also exploring selling back some of its interests in the joint music venture Sony BMG Music Entertainment to Sony.
UMG, WMG and EMI are among the finalists, along with buy-out specialists such as Kohlberg Kravis Roberts, to pay out as much as $1.9 billion for the company.
The family-controlled group invited selected music companies and private equity firms to tender bids for BMG Songs so it can finance its buy-back of 25.1% of its shares from Groupe Bruxelles Lambert for 4.5 billion euros to keep the company in full control of the Mohn family dynasty.
The sale of BMG Music could tip the balance of power in key parts of the music industry.
Universal Music looks to be the favorite, according to industry executives. It trails rivals EMI and Warner in publishing and buying BMG would solve that problem.
Music publishing’s steady, predictable earnings have grown in appeal at a time when piracy and declining record sales are plaguing other parts of the industry.
The sale of BMG Music Publishing will also set an important marker for future deals in the sector and determine the financial parameters for the ongoing takeover pas de deux between EMI and Warner. Any deal between the two is likely to result in the sale of one of their music publishing units to satisfy regulators and to raise cash.
EMI, which owns the dominant music publishing business, has explored the possibility of teaming up with a private equity firm, possibly KKR, according to sources.
BMG Music boss Nicholas Firth has also reportedly been trying to raise funds for a management buy-out.
