Warner Music Bought by Len Blavatnik's Access Industries in $3.3 Billion Deal

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Blavatnik, who previously bid for MGM, was already an investor in the third-largest music company and is a former board member.

NEW YORK - Billionaire Len Blavatnik's Access Industries, which was previously unsuccessful in the bidding for MGM, has won the auction for Warner Music Group with a $3.3 billion deal that the companies announced on Friday.

Blavatnik was already an investor in the third-largest music company and is a former board member who has remained close to chairman and CEO Edgar Bronfman Jr.

The music major, currently controlled by private equity firms that acquired it from Time Warner in 2004 for $2.6 billion, said Friday that Blavatnik prevailed in the bidding process, which also drew bids from the Gores brothers and others, by offering $8.25 a share in cash to take the company private. Access Industries will also assume Warner Music's about $2 billion in debt.

That is 4.4 percent above the stock's closing price on Thursday. It represents a 34.4 percent premium over the volume-weighted average share price of $6.14 over the previous six months.

Management is expected to stay in place, and the company will keep its name after the deal close, which is expected by the end of the third quarter of the year.

Observers expect Access Industries to go after EMI Group next to reap cost savings and other benefits from a combination. Current owner Citigroup has been preparing an auction for the music company while the Warner Music auction has been going on.

“I am excited to extend my longstanding involvement with Warner Music," said Russian-born Blavatnik, who is chairman and founder of Access Industries, which previously also agreed to establish a film fund with the Weinstein Co. "It is a great company with a strong heritage and home to many exceptional artists."

Said Jorg Mohaupt, head of media at Access Industries: “The music industry is at an inflection point where digital adoption is rapidly gaining momentum. Warner Music, as one of the most progressive forces in the music business, is well positioned to capture this opportunity for music creation and distribution.”

Bronfman called the deal an "exceptional value-maximizing opportunity that serves the best interests of stockholders as well as the best interests of music fans, our recording artists and songwriters, and the wonderful people of this company." He added that Access Industries is "supportive of the company’s vision, growth strategy and artists," but will be bringing "a fresh entrepreneurial perspective and expertise in technology and media" to the table.  

Email: Georg.Szalai@thr.com

Twitter: @georgszalai