Sony to Buy Out Michael Jackson Estate's Half of Sony/ATV Music Publishing

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Sony will pay $750 million for the 50 percent interest in the publishing company it doesn't already own.

The Sony Corp. has agreed to buy out the Michael Jackson estate's 50 percent interest in Sony/ATV, giving it complete control of the music publishing company.

According to the announcement, Sony has signed a memorandum of understanding to pay the Jackson estate $750 million for the 50 percent interest it has in the publishing company that began as a joint venture between Sony and Michael Jackson 21 years ago. A definitive agreement is expected by March 31, with the deal closure expected to come in late 2016 or early 2017. The transaction is subject to certain closing conditions as well as regulatory approval.

With the deal's closure, the Jackson estate will retain the 10 percent interest it holds in EMI Music Publishing, as well as Mijac Music, the publishing company that owns the songs written by Michael Jackson as well as songs written by other writers, plus Jackson's master recordings.

"This transaction further allows us to continue our efforts of maximizing the value of Michael's Estate for the benefit of his children," Jackson estate co-executors John Branca and John McClain said in a statement. "It also further validates Michael's foresight and genius in investing in music publishing. His ATV catalogue, purchased in 1985 for a net acquisition cost of $41.5 million, was the cornerstone of the joint venture and, as evidenced by the value of this transaction, is considered one of the smartest investments in music history."

The deal culminates a buy-sell provision activation that began in September. At the time Sony triggered the provision, the Jackson estate was in a no-lose situation. The executors would either deliver the estate a trophy property through its acquisition or, as it turns out, a big payday.

A portion of the proceeds will be used to finish the pay-down of $500 million in debt that the estate held seven years ago, leaving it completely debt-free and with cash on hand, according to a source. After taxes, fees and expenses, the balance will be transferred to a trust for the benefit of Michael's beneficiaries: his three children.

For Sony, the acquisition ends what has been termed "a complicated ownership structure," giving the company sole control of the publishing operation, which will enhance its position in the marketplace. In addition to Sony/ATV, Sony owns 29 percent of EMI Music Publishing and serves as its administrator. Martin Bandier, who recently signed to a three-year contract, oversees a publishing company that generates more than $1.2 billion in revenue between Sony/ATV and EMI Music Publishing.

"This acquisition will enable Sony to more quickly adapt to changes in the music publishing business, while at the same time continuing to be an unparalleled leader in the industry and a treasured home for artists and writers," Sony Entertainment CEO Michael Lynton said in a statement. "All of us at Sony look forward to continuing to work with the Estate to further Michael Jackson's legacy in many different ways."

The Jackson estate side of the deal was assisted by Branca’s law firm, Ziffren Brittenham LLP, Shot Tower Capital, Greenberg Traurig LLP, Kinsella Weitzman Iser Kump @ Aldisert LLP, Venable LLP and Rob Wiesenthal, former CFO for Sony Corp. of America, according to a source.

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