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Warner Music Group sold for $3.3 billion to Access Industries' Len Blavatnik

May 6, 2011 |  8:57 am

Green-day-span Access Industries, a holding company founded by oil baron Len Blavatnik, won the auction to buy Warner Music Group Corp. for $3.3 billion in cash, the companies announced Friday morning. 

Blavatnik edged out more than a dozen other suitors including Sony Music Group, supermarket magnate Ron Burkle, Platinum Equity, Live Nation Entertainment and investment firm Kohlberg Kravis & Roberts, whose unsolicited offer late last year kicked off the auction process. KKR's partner in the bidding was German music company Bertelsmann.

The deal calls for Warner to receive $8.25 per share, a 34% premium over the company's average stock price over the last six weeks, the company said. It's also 75% higher than Warner's closing price on Jan. 20, the day before the New York Times published news of the bidding. Warner's share closed at $7.90 on Thursday.

Blavatnik, whose all-cash bid was the highest, had other advantages, said a source familiar with the sale. The Russian-born industrialist, who had been a Warner board member between 2004 and 2008, was also knowledgable about the company's operations and finances.

More importantly, Blavatnik's offer had an edge over Sony and Bertelsmann in that it would not run into antitrust hurdles by combining with another music company in a market that is already concentrated in the hands of four companies -- Universal Music Group, Sony, EMI and Warner.

The sale comes at a challenging time for the record industry, whose revenue has been ravaged in the last decade by piracy and a profileration of legal but free alternatives, including online radio services such as Pandora and Slacker.

Another music company, London-based EMI, is expected to be put up for sale later this year, presenting Blavatnik with an opportunity to acquire the company and combine it with Warner to produce the world's largest music company.

-- Alex Pham

Photo: Green Day, on the Warner Music Label, performs in Irvine. Credit: Mariah Tauger / Los Angeles Times

 

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