Ukrainian-born billionaire industrialist Len Blavatnik has kicked the tires of many movie companies in recent years. His privately held U.S.-based Access Industries was the backer of Stewart Till’s 2009 purchase of Icon UK film and entertainment business from then owners Mel Gibson and Bruce Davey. You also may recall that “The Russian” (though his flack Mike Sitrick hates it when I refer to the Harvard-educated naturalized American citizen as such) was one of the bidders for MGM but only wanted to make a recapitalization/restructuring offer, meaning that it wasn’t an all-cash offer as requested by the investment bankers. Then again, Blavatnik loves a distressed property he can own or invest in at a bargain, which is how he amassed his global conglomerate of industrial, chemical, real estate, and media properties. He already was an investor in Warner Music Group and you can’t get more distressed than the recording industry these days. Now his Access will buy Warner Music for $8.25 a share in a transaction valued at $3.3 billion. The deal includes Warner’s entire recorded music and music publishing businesses. The purchase is expected to close in the third quarter.
Said to be worth in excess of $7 billion, Blavatnik managed to fly largely under the media radar until his involvement with Hollywood’s MGM and Icon UK. Founded by Blavatnik in 1986, Access Industries’ other media holdings include majority stakes in Perform Group (the online sports broadcaster), TopUpTV (a UK-based digital terrestrial TV service provider), and Amedia (an entertainment TV content developer and producer in Russia) together with minority stakes in RGE Group (an Israeli TV production company). At a company conference in 2005, he reportedly told senior execs: “Basically the idea is we buy low and sell high. We are here to make money.” Here’s the news release:
Warner Music Group Corp. (NYSE: WMG) and Access Industries, the U.S.-based industrial group, today announced the execution of a definitive merger agreement under which Access Industries will acquire WMG in an all-cash transaction valued at $3.3 billion. The purchase includes WMG’s entire recorded music and music publishing businesses.
The purchase price of $8.25 per share represents a 34.4% premium over the volume-weighted average share price of $6.14 over the previous six months.
Under the terms of the merger agreement, WMG’s stockholders will receive $8.25 per share in cash at the closing of the transaction. WMG’s Board of Directors approved the transaction and recommended that WMG’s stockholders approve the transaction. In addition to stockholder approval, the transaction is subject to the satisfaction of customary closing conditions and regulatory approvals. It is anticipated that the transaction will be completed in the third calendar quarter of this year.
WMG’s Chairman and CEO, Edgar Bronfman, Jr., said, “We believe this transaction is 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. We are delighted that Access will be the new steward of this outstanding business. They are supportive of the company’s vision, growth strategy and artists, while bringing a fresh entrepreneurial perspective and expertise in technology and media. Most importantly, Access supports Warner Music’s commitment to our recording artists and songwriters who are the foundation of our current and future success.”
Len Blavatnik, Chairman and founder of Access Industries, said, “I am excited to extend my longstanding involvement with Warner Music. It is a great company with a strong heritage and home to many exceptional artists. I look forward to working closely with the many talented people within the company.”
Jorg Mohaupt, Head of Media at Access Industries, added, “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.”
Scott Sperling, Presiding Director of WMG, said, “It has been our great pleasure working with the extraordinary team at Warner Music over these past seven years. The company has managed to significantly increase market share and profitability during our ownership period and consistently outperformed even during a challenging period for the industry. Len Blavatnik and Access are likewise deeply committed to the music business and we know that we will be leaving the company in good hands.”
Following the closing of the transaction, WMG will become a privately held company and its stock will no longer be traded on the New York Stock Exchange. The company will retain the Warner Music Group name and will continue to operate out of its current facilities.
Thomas H. Lee Partners L.P. and its affiliates, Bain Capital Partners, LLC and its affiliates, and Edgar Bronfman, Jr., who together hold approximately 56% of the company’s outstanding shares, have entered into a voting agreement with Access under which those stockholders have agreed to vote their shares in favor of the merger.
Access has secured committed financing from Credit Suisse and UBS Investment Bank. These funds, in addition to equity financing from Access, will finance the cash consideration to WMG’s stockholders.
Goldman, Sachs & Co. and AGM Partners LLC acted as financial advisors to WMG, and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as the company’s legal advisors. Credit Suisse and UBS Investment Bank acted as financial advisors to Access, and Debevoise & Plimpton LLP acted as Access’ legal advisors.
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