Bertelsmann Buys Out KKR

Bertelsmann has bought out its joint-venture partner Kohlberg Kravis Roberts & Co. and is shaping itself to become the fourth major music company.

Neither side is saying how much money changed hands and the deal is still subject to regulatory approval.

Reuters is pitching the purchase price at around euro 800 million ($1.05 billion).

“This is a great day for Bertelsmann: We are bringing the music home to our group,” said Bertelsmann chairman and chief exec Thomas Rabe. “A few years after our exit from the traditional music business, in association with KKR we have succeeded in building the world’s fourth-largest music rights management business.”

BMG, or Bertelsmann Music Group, administers the rights to more than 1 million songs, including works by such artists as Bruno Mars, Duran Duran, Gossip, Johnny Cash, and

It also represents the master rights – composition and recording – of artists including Brian Ferry, Nena and Anastacia.

“Our partnership made it possible for BMG to take advantage of consolidation opportunities and to rapidly advance the organic expansion of the business. I thank them for an excellent collaboration,” Rabe said of a partnership – and even the ending of it – that had presumably suited both parties.

The deal was no surprise as more than six months ago the New York Post said Bertelsmann and KKR were at loggerheads over how far the company should go to hook a major acquisition, such as the UK’s EMI.

Recently other business papers including the UK’s Financial Times have said that a deal was imminent, although no announcement had been expected before Bertelsmann’s earnings call March 26.

Bertelsmann gets sole ownership of a company that now stands behind Universal, Warner and Sony in the major music company pecking order, while the U.S.-based multinational private Equity firm has been able to exit the deal inside four years.

BMG was itself one of five major music companies until 2004, when it reduced that number to four by merging with Japanese major Sony Music.

Approval of the deal rattled around the European Commission and the EU courts for years, until the German media giant sold its shareholding to its Japanese partner in for $1.5 billion in 2008.

That company was subsequently renamed as Sony Music Entertainment Inc., and Bertelsmann’s involvement in the music industry was effectively at an end.

With a couple of years later it announced its return and started up again as Berteslmann Music Group, opening up for business in January 2009.

In July it announced what was to be a five-year joint-venture with KKR, which invested $69.6 million for a 51 percent holding and committed to put in a further $278.4 million to finance acquisitions.