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"The completion of this transaction is the natural culmination of a successful business relationship between Zomba and BMG that goes back 12 years. On a personal level, I look forward to my new advisory role to Zomba and its new owners under the leadership of Chairman and CEO, Rolf Schmidt-Holtz."
——Clive Calder, Zomba Chairman/CEO

BERTELSMANN BUYS ZOMBA
FOR $2.7 BILLION

Deal Brings Backstreet Boys, NSYNC, Britney to BMG’s Artist Roster
Just one week after closing on Clive DavisJ Records, Bertelsmann has scooped up the other Clive’s label group.

Bertelsmann’s BMG on Tuesday morning completed its purchase of the Zomba Music Group for $2.74 billion.

As part of the deal, Zomba's Chairman/CEO Clive Calder has resigned, but will remain on a part time basis in an advisory role. For the next six-12 months, Calder will serve as an advisor to Zomba and BMG Chairman/CEO Rolf Schmidt-Holtz, working out of offices in New York and London. According to sources, Calder has earmarked 200 employees around the world who have been with the company more than five years to receive "extraordinary bonuses" thanking them for their service.

This ends a process that Zomba started in June this year by exercising its put option for BMG to acquire it.  In September, the European Commission gave its approval to the merger. The put option was set to expire next month, and the two sides had been in due diligence over the final purchase price since the EC nod.

The $2.74 billion purchase price was adjusted according to the mechanism provided for in the original agreement entered into in 1991. The deal enables BMG to snap up the other 80% of Zomba's record division, with its cornerstone Jive label, as well as the 75% of the music publishing it didn't already own.

The business relationship between Zomba and Bertie dates back to the early '80s, when the Jive label launched as the BMG-distribbed home of Billy Ocean, A Flock of Seagulls and DJ Jazzy Jeff & the Fresh Prince. BMG originally acquired a 25% stake in Zomba's music publishing division in 1991, and 20% of its record division in 1996.

The deal brings Backstreet Boys, NSYNC and Britney Spears, among others, to the BMG lineup, significantly boosting BMG’s artist roster.

No plans have yet been made as to where Zomba will fit in BMG's new world order.

"We intend to maintain Jive and its sister labels," a BMG spokeman told HITS. "We have no integration plans. Any future plans we develop will be done in cooperation with Zomba management."

While it is unclear what will happen to some staffers, insiders say Jive President Barry Weiss will stay on.

The acquisition also makes BMG the world's third largest music publisher, and a leader in the growing field of contemporary Christian and Gospel music. BMG Music Publishing chief Nick Firth will oversee the joint publishing unit.

Gunter Thielen, Chairman/CEO of Bertelsmann, said: "This acquisition comes at a time of renewed stability and success at BMG. We expect that Zomba combined with BMG will further elevate Bertelsmann's stature in the worldwide music industry."

Schmidt-Holtz added: "I am happy to welcome all of Zomba's talented employees, artists, and songwriters to the BMG family. We are fortunate to have Clive Calder as an advisor because his enormous skills, talents and creativity will be a tremendous asset."

Calder said: "The completion of this transaction is the natural culmination of a successful business relationship between Zomba and BMG that goes back 12 years. On a personal level, I look forward to my new advisory role to Zomba and its new owners under the leadership of Chairman and CEO, Rolf Schmidt-Holtz."

Zomba Music Group, which launched the teenpop phenomenon, has seen its marketshare plummet from a high of around 6% to a recent 3.4%, of which Jive represents 2.4%. The Jive Group also includes the Silvertone and Volcano labels, the latter the home of Tool. In addition, the Zomba Group owns the world's leading gospel label, Verity, and one of the three largest Christian music groups in Provident.

Last Tuesday, BMG acquired the half of J Records it didn’t already own and anointed Davis Chairman of a newly reconfigured RCA Music Group, which will include both RCA Records and J.

Stay tuned for more details to come.

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