Bronfman group to buy Warner Music for $2.6 billion in cash; EMI withdraws competing offer
Monday, November 24th 2003, 12:00 am
By: News On 6
LOS ANGELES (AP) _ A partnership led by former Universal Music chief Edgar Bronfman Jr. has agreed to buy Warner Music Group for $2.6 billion cash, creating one of the world's largest independent music companies.
The announcement Monday came just hours after London-based EMI Group PLC said it had withdrawn its offer to purchase Warner Music, a unit of the giant media conglomerate Time Warner Inc.
Under terms of the Bronfman group's deal, Time Warner would retain an option to buy back a minority stake in the company, which is home to such artists as Madonna, R.E.M and the Red Hot Chili Peppers.
The purchase, which also includes Time Warner's Warner/Chappell Music publishing business, would create one of the world's largest independent music companies and include some of the industry's best known music labels, including Warner Bros., Atlantic and Elektra Records.
``Warner Music Group is one of the world's greatest recorded music and music publishing companies, and we have great faith in its potential for growth as an independent company and in the long-term opportunities of this industry,'' Bronfman said. ``We have brought together a highly sophisticated and well-financed group of investors to support the business.''
Bronfman was slated take the top spot at the new company, which will retain the name Warner Music. Current chairman Roger Ames was also would be staying on, Bronfman said.
Buying Warner Music gives Bronfman another chance to build on the success he had with Universal Music, which grew into the biggest record company in the world under his watch. Bronfman sold the company, a unit of his family's longtime liquor business, Seagram Co., to Vivendi in 2000. Bronfman tried to buy back Vivendi this year, but lost out to NBC.
Until the Bronfman group's offer emerged last week, it had appeared that EMI, the world's third-largest music company, was the front-runner to buy Warner Music.
``We have concluded that it is no longer possible to reach an agreement on terms which would be acceptable to both parties and in the interests of EMI's shareholders,'' Eric Nicoli, EMI chairman, said in the statement.
The company last week announced its interim profit results, revealing that its profit sank in the first half of its fiscal year.
The Bronfman purchase was expected to close within two months.
``I'm very pleased that we are putting our music company in such capable hands,'' said Time Warner Chairman and CEO Dick Parsons. ``Despite my personal fondness for the music business as well as for all of our wonderful managers and music group employees, I believe that this transaction is clearly in the best interests of our company's shareholders.''