WMG To Be Sold In Days?

Six weeks ago there were said to be 10 bidders for Warner Music Group but now the UK press reckons it’s down to two or three.

The Sunday Times says media and mining tycoon Len Blavatnick and the billionaire Gores brothers are on the verge of making formal bids, but the Daily Telegraph isn’t ruling out a joint bid from BMG Rights Management and Universal Music Group.

It says BMG Rights, which is co-owned by venture capitalist KKR and German media giant Bertelsmann, is teaming with market leader Universal to buy music companies that may include Warner and EMI.

The two companies have reportedly drawn up a plan that would “get round regulatory issues” and cut up Warner and EMI, with BMG taking the publishing and back catalogue and Universal taking the recorded music businesses.

The Sunday Times, which expects Warner to be sold for $3 billion-plus within a week, also has Blavatnick and the Gores brothers in the frame to buy the English music company.

BMG was originally thought to be out of the bidding for Warner because its offer was too low. It’s also hard to see how re-entering the process – particularly in cahoots with market leader Universal – could fail to be subject to several months of regulatory wrangling.

The independent music companies have warned U.S. bank Citigroup it faces a rough ride if it tries to sell EMI to another major label, and there’s no reason they won’t take a similar stance over the sale of Warner.

Blavatnick, viewed by both papers as a likely buyer for Warner and EMI, and the Gores brothers are both expected to make offers that include taking on the American company’s $2 billion debt and injecting about $1 billion of new equity.

The Gores brothers’ consortium is led by Tom Gores’ Platinum Equity and Gores Group, the private equity business run by Alec Gores.
Sony was reported to be making a bid in partnership with private investor Ron Perelman – who has a track record for buying struggling businesses and later selling them for a huge profit – and Guggenheim Partners, which supervises more than $100 billion worth of assets. That bid may also be stalled by regulatory issues.

Although Citigroup has said it’s in no hurry to sell EMI, and would also prefer to sell it as a whole, the Telegraph expects it will be put on the block within a couple of months.