ALL IN THE FAMILY: BLAVATNIK ACQUIRES WARNER MUSIC

Russian-born billionaire Len Blavatnik's Access Industries has emerged as the winner in the Warner Music Group sweepstakes, acquiring the company this morning in a deal valued at north of $3 billion.

It marks a triumph for Edgar Bronfman and Lyor Cohen, who took over the company seven years ago with a group of private equity investors, got their money out via an IPO and managed to sell the venerable recording company again, taking it private.

So it appears that the long-disparaged Bronfman has managed to successfully carry through the first part of his grand plan: orchestrating the sale of WMG to an ally and thus remaining in the saddle. Part two of the plan is expected to involve the selling off of Warner/Chappell to finance the acquisition on EMI.

Here's a text of the interoffice letter Bronfman sent out this morning:

Dear Colleagues:

Today marks a milestone in our evolution as a company.

We have just announced that Warner Music Group is being acquired by Access Industries. This is strong validation that WMG is today one of the most progressive forces in music and recognition that we are well-positioned to succeed through the industry transition.

Access is deeply committed to helping us achieve our fullest potential in the years to come. They value our rich history and understand that success relies on a relentless commitment to artist development and A&R. They know that our people are the best in the business. And they recognize the excellence in both our recorded music and music publishing divisions and our incredible family of recording artists and songwriters. Further, Access has an established and successful track record of supporting entrepreneurs in various fields including media. They understand our business and our culture, and we will no doubt benefit from their global business expertise and strategic wisdom.

We have achieved so much in the past seven years in the transformation of our company and, in addition to these achievements, we have continued to invest strongly in A&R and artist development while also fundamentally revamping our approach to artist relationships. Now, we are true partners with artists in almost every aspect of their careers. This disciplined, thoughtful and creative approach sets the stage for our future growth.

I would also like to thank our original investors, who remained steadfast in their support of our company even during a very challenging industry transition. We are grateful for their thoughtful guidance and wise counsel. Today’s announcement is also a validation of their vision for the prospects of a progressive music company.

I have no doubt that our new owners will serve as fantastic new stewards for our company, our artists and songwriters, for music fans and for our employees.

The transaction is expected to close in the third quarter of this calendar year, subject to stockholder approval and the customary closing conditions and regulatory reviews. After the closing, WMG will become a private company and our stock will no longer trade on the New York Stock Exchange.

Until that time, it is business in the normal course. Again, it’s very important that we keep our eye on the ball and continue to serve artists, songwriters, customers, partners and music fans at the same high levels they have come to expect of us.

Finally, let me once again thank you for everything you’ve done to help bring us to this moment. Today’s news is tangible evidence of how far we’ve come as a company and how much WMG can accomplish in the years ahead. You remain, quite simply, the best in the entire industry and I can’t wait to see what the future brings.

If you do have further questions or comments, I hope that you will email me directly at [email protected]. You can read the full press release here.

Sincerely,

Edgar