Warner In Tug Of Gores
Alec and Tom Gores’ private equity firms are reportedly upping their bid for Warner Music Group to $8.50 a share. Meanwhile, the New York Post says Len Blavatnik – who’s already put in an acceptable offer for WMG – is now off in pursuit of EMI.
The paper says insiders have let slip that the Russian-born tycoon has such an inside track with U.S. banker and new EMI owner Citigroup that they doubt an auction will officially get under way.
These sources have also claimed that Blavatnik and Citi may already have started one-on-one meetings that could lay the foundations for a deal.
If the Post story is on the mark, the global recorded music and publishing sectors can look forward to at least a couple of years of regulatory wrangling.
Impala, the Brussels-based independent music companies’ organisation, has already made it clear it’s not happy with the number of major music companies being reduced from four to three.
It may be that Blavatnik could justify paying more for EMI than the $3.3 billion he’s bid for WMG, particularly if integrating the two companies produced a substantial cost saving.
Even before the bidding war for Warner, many UK business analysts reckoned that – with both companies valued at around $3.5 billion – the English company was the better buy.
While the American outfit has repeatedly reported losses, the troubled London-based firm did at least boost its operating margins under Terra Firma’s ownership.
EMI’s projected earnings for 2011 are expected to be about $540 million, while Warner’s earnings are estimated to come in at around $310 million.
Although the Gores brothers are said to be weighing up if they should top Blavatnik’s bid for Warner by offering $3.5 billion and picking up the tab for the $60 million or so fees involved in the sale, some sections of the UK media are suggesting they – along with other WMG bidders such as BMG Rights Management – may have put that defeat behind them and could also look to take a run at EMI.