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"The key issues for Warner Music's board are price and simplicity of the transaction process," said one source.
TWO WMG BIDS REMAIN
Company Expects to Be Sold by End of Week for $3 Billion+
And then there were two.

Len Blavatnik’s Access Industry and a joint bid by brothers Tom and Alec GoresPlatinum Equity and Gores Group are the finalists to acquire Warner Music Group for a price tag valued at more than $3 billion, according to a report over the weekend in Reuters.

Russian businessman Blavatnik, a pal of WMG’s Edgar Bronfman, already owns a small stake in the company, while the Israeli-born Gores recently teamed up to acquire software one-stop Alliance Entertainment from Source Interlink in Sept. 2010. Billionaire Ron Burkle's Yucaipa Companies dropped out of the bidding late last week

Final buyout bids are due on Monday and the company could be sold by the end of the week, though it is far from a done deal.

The second-round bids came in at around $3 billion two weeks ago, which included Bertelsmann and KKR’s BMG Rights Management, which refused to go higher, but may still get involved in picking off a publishing company from one of the two financial entities still on tap. Sony Music is also sitting on the sidelines, with the WMG board choosing to avoid an expensive delay by regulators if another music company is involved. Bronfman has reportedly demanded a premium from music companies in their bids to account for that hurdle.

Warner shares have risen nearly 60% to $7.47 at the end last week.

"The key issues for Warner Music's board are price and simplicity of the transaction process," said one source.

Warner Music Group is highly leveraged with around $1.1 billion in equity and $1.9 billion in debt. It is expected to generate around $333 million in earnings before interest, depreciation and amortization (EBITDA) in fiscal year 2012, which means it is currently being valued at around nine times future earnings.

When Citigroup puts EMI on the market later this year, the speculation is whoever wins the WMG derby could make a bid for EMI, and put the two together.

Regulators have put the kibosh on previous attempts of the two to merge in the past decade.

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