Warner Music Group’s sale to Access Industries has been completed for $8.25 per share in cash, or $3.3 billion. The record label’s board approved the deal two weeks ago.
WMG will be part of Airplanes Music, a division of Access Industries, the diversified business group owned by Russian-American industrialist Len Blavatnik, whose $3.3 billion offer in May represented a 34.4 percent premium over the record label’s average half-year price of $6.14.
The company will remain named and located as is, but Access will take WMG off the stock market. The brief statement about the deal’s closing did not say whether CEO Edgar Bronfman Jr. will stay aboard. As it stands right now, Bronfman is still the head of the company, but again, that could change.
With WMG done, the focus will shift to what will happen with EMI Group, which began exploring a sale in June. Citigroup and Access Industries are both vying for EMI. For Access Industries, the addition of another record label, considering the weak state of the record business, may seem crazy, particularly the premium he paid for WMG. But Blavatnik seems to feel he would be able to find some value after some heavy cost-cutting while continuing to market a roster that so far includes big names like Bruno Mars, R.E.M., Cee Lo Green and Lupe Fiasco.
In terms of what Blavatnik is getting with WMG, in May, the company reported that Q1 losses grew amid anemic revenue gains. Meanwhile, digital now makes up more than 30 percent of the labels revenues — a combination of the decline of physical CD sales and, to be fair, an reasonably aggressive focus on building up its online and mobile distribution.
WMG is scheduled to have its last quarterly earnings report on Aug. 1, as it is being delisted from the NYSE now that it is operating within a private company. But that Q2 report might or might not happen, though WMG still has bondholders it has to report to, but it’s not clear if that will be done through the standard quarterly report.