Two weeks ago, Sony Music and BMG agreed to merge into one big-ass music company, and it appeared that Warner Music Group and EMI were going to do the same. But now WMG has apparently spurned EMI and is going with a group led by Edgar Bronfman Jr.:
- Time Warner took a major step yesterday toward selling its Warner Music division for $2.5 billion to a consortium led by Edgar Bronfman Jr., as its board pulled away from a previously favored higher offer from the EMI Group, people involved in the board meeting said.
Time Warner’s embrace of the offer means that Mr. Bronfman may be poised to return to the entertainment industry, offering him a chance to repair his battered reputation just three years after he lost much of his family’s fortune in a calamitous deal to sell the family business, Seagram, to Vivendi.
….people involved in yesterday’s Time Warner board meeting said Richard D. Parsons, the company chairman, had come to favor Mr. Bronfman’s bid in part because the prospect of the five major music companies rushing to become three would only fuel regulatory opposition to any deals.
Mr. Bronfman’s bid also includes an option for Time Warner to retain or later buy back a minority stake in Warner Music. People involved in the meeting said the company was not likely to keep a stake at the time of the sale. But if the industry recovers, Time Warner may take advantage of a provision that allows the company to buy back as much as 15 percent of Warner Music at about a 25 percent discount in three years, these people said.
….EMI’s offer was potentially worth more than $2.8 billion – slightly more than the bid from the Bronfman camp – but was partly in the form of stock and required Time Warner to sell its music publishing business separately.
….The board’s decision is also an apparent victory for Roger Ames, the chairman of the Warner Music division. Time Warner executives have said that Mr. Ames has strenuously opposed the proposed sale of his division to EMI, arguing that its prospects and its stock were both shaky.
Mr. Ames also did not want to work for Alain Levy, head of EMI Music and Mr. Ames’s former boss in a previous stint at Polygram; a sale to EMI would have very likely left Mr. Ames without a job. Mr. Bronfman, on the other hand, plans to keep Mr. Ames around, people involved in Mr. Bronfman’s bid said. [NY Times]