Greenfield takes another shot at WMG

NOT A BUNNY FANCIER: BTIG analyst Rich Greenfield, who has long been the scourge of Warner Music on Wall Street, was inspired to take another shot yesterday following the stock’s 13% spike two days earlier, spurred by reports that the company would fetch $2.5-3 billion. Noting that this price range equates to $6.60-$9.90 per WMG share, Greenfield pointedly asked, “Why Would Someone Pay Even $2.5 Billion for Warner Music?” before getting down to the nitty-gritty. “Beyond the vanity element that drove Guy Hands/Terra Firma’s disastrous acquisition of EMI, we simply do not see a reason why someone would pay $2.5bn for WMG, particularly with EMI for sale as well. We continue to believe EMI’s music publishing asset is far better positioned than Warner/Chappell.” Citing an expected 9% drop in fiscal 2011 EBITDA, falling revenues at WCM and “Non-Existent Free Cash Flow,” Greenfield places the fair value for WMG at $4.50 tops, equating to an enterprise value of $2.2 billion for the kit and kaboodle. “We simply see no reason why a buyer is going to pay a premium for WMG—these are simply not must-have assets, within an industry suffering from significant uncertainty/headwinds,” Greenfield concluded. Ouch. (4/1a)