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Warner Music shares soar on speculation that sale is imminent

May 5, 2011 |  2:00 pm

Warner Music Group Warner Music Group Corp.'s shares surged more than 6% on Thursday as rumors of an imminent sale of the New York music company reached fever pitch.

Its shares, which gained 48 cents to close at $7.90, are up 67% from Jan. 20, the day before the New York Times reported that Warner was fielding bids.

Warner, which declined to comment on the speculation, has been entertaining multiple cash offers, some exceeding $3 billion, since hiring Goldman Sachs late last year to coordinate a potential sale of the company, according to sources familiar with the auction process.

Leading candidates include Russian-born billionaire Len Blavatnik, Sony Music Entertainment, investment firms Platinum Equity and Kohlberg Kravis & Roberts, Beverly Hills concert promoter Live Nation Entertainment Inc., among others.

Blavatnik, who sat on Warner's board from 2004 to 2008, emerged this week as the top candidate, according to reports from Reuters, Bloomberg and the Wall Street Journal.

Born in Moscow, Blavatnik made his fortune in oil and was estimated by Forbes to be worth more than $7.5 billion, making him the 93rd richest person in the world in 2010. Educated at Harvard University and Columbia University, Blavatnik became a U.S. citizen in 1981. A message to Blavatnik's spokeswoman was not immediately returned.

The industrialist turned his attention to entertainment last year, vying to buy MGM last year before withdrawing his bid last May. He ended up investing $25 million to $100 million in the Weinstein Co., the movie company founded by Bob and Harvey Weinstein.

Ultimately, the winner will be the bidder offering the most cash, according to sources familar with the auction. Warner Music Chief Executive Edgar Bronfman Jr., whose family made its fortune as alcohol distillers under the Seagram Co., has a reputation as a consummate negotiator. Bronfman reportedly just purchased a New York penthouse for $15.9 million, according to Bloomberg, more than half off the original asking price.

-- Alex Pham

Photo: Warner Music Group's Burbank office in 2005. Credit: Mel Melcon / Los Angeles Times.