Billionaire Blavatnik buys Warner Music for $3.3B, but other offers loom
Access Industries, the privately held industrial group founded by billionaire Len Blavatnik, has agreed to acquire Warner Music Group in an all-cash buyout totaling $3.3 billion. Access Industries will pay $8.25 per share for the publicly traded label, a 34.4 percent premium over the stock's six-month average price. Blavatnik served on the WMG board from 2004 to 2008 and also acquired chairman Edgar Bronfman, Jr.'s Manhattan townhouse for $50 billion in 2007--conventional wisdom suggests Blavatnik's relationship with Bronfman guarantees the latter will continue to helm WMG after the deal closes.
Warner Music Group is home to artists including Metallica, R.E.M. and Bruno Mars. Blavatnik acquires a label in economic freefall: Revenues declined to $2.98 billion in 2010 from $3.52 billion in 2006, and industry watchers anticipate revenues will slip to $2.7 billion during the current year. There is considerable speculation Access Industries will also seek to acquire major label EMI, seized by creditor Citigroup earlier this year. Warner Music worked to assemble a bid for EMI before it was seized, sources indicate.
However, Bloomberg reports that private equity billionaire brothers Tom and Alec Gores are mulling a revised Warner Music Group bid between $8.35 and $8.50 a share. Citing a source with knowledge of the deliberations, the report states Warner Music's board can consider higher offers for 30 to 60 days, with the size of a new bid dependent on any breakup fee pledged to Blavatnik as well as whether the company reports higher-than-estimated earnings on May 10. The source adds the Gores are contacting Sony Music Entertainment and Universal Music to join their bid.
- read this Bloomberg article