Warner Music Targets Valuation of Up to $13.3 Billion in IPO

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Len Blavatnik

The stock offering targets a price range of $23 to $26 per share, which would value the company at around $12.5 billion.

Warner Music Group on Tuesday moved forward with its planned initial public offering, saying it will raise as much as $1.8 billion for shareholders. 

The company in a regulatory filing said it will offer 70 million shares of Class A common stock at a target price of $23 to $26 per share. The stock will trade on the Nasdaq market under ticker symbol "WMG."

In its updated filing, the music major said it would "not receive any of the proceeds from the sale of the shares being sold by the selling stockholders in this offering."

The company will have 510 million shares outstanding after the IPO, which would value it at $11.7 billion-$13.3 billion, or $12.5 billion at the midpoint of the price range.

Warner Music, owned by Len Blavatnik's Access Industries, had filed for its IPO in February, with Morgan Stanley, Credit Suisse and Goldman Sachs acting as the joint lead underwriters.

Upon completion of the initial offering, WMG will have two types of common stock, Class A and Class B, the latter of which is held by Access Industries and will represent 99.2 percent of the total combined voting power of outstanding common stock following the offering. Because Access will control a majority of combined voting power, Warner Music said it will be a "controlled company" and may elect to not comply with certain governance standards under Nasdaq rules.

The speedy arrival of the COVID-19 pandemic in March led the firm to delay its long-planned IPO, however the company said certain factors in its balance sheet have actually improved since the economic shutdown. While total revenue was down during the month of April compared to the year-ago period, streaming revenue actually grew 12 percent to $183 million, and publishing digital revenue improved by $3 million to $22 million compared to April 2019.

Warner Music's recorded music division generated $3.84 billion of revenue in fiscal year 2019, representing 86 percent of total revenue, according to that filing. The division is home to such artists as Ed Sheeran, Bruno Mars and Cardi B and includes storied labels like Atlantic, Elektra, and the recently rebranded Warner Records.

Its publishing arm, Warner Chappell Music, has a catalog of more than 1.4 million copyrights, including from songwriters Twenty One Pilots, Lizzo and Katy Perry. It generated $643 million of revenue in the latest year, or 14 percent of total revenue.

The company also owns global music distribution firm Alternative Distribution Alliance, live music app Songkick, EMP Merchandising and UPROXX.

Blavatnik's Access Industries acquired the music giant in 2011 for $3.3 billion.