Tuesday, 23 April 2024

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3 reasons why… Warner Music Group might be tempted to bid $1.8 billion for Believe

3 reasons why… Warner Music Group might be tempted to bid $1.8 billion for Believe

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MBW Reacts is a series of analytical commentaries from Music Business Worldwide written in response to major recent entertainment events or news stories. Only MBW+ subscribers have unlimited access to these articles. MBW Reacts is supported by JKBX, a technology platform that offers consumers access to music royalties as an asset class.

Warner Music Group has just four more days to make a formal/binding offer to acquire Believe. After Sunday (April 7), its chance will have gone.

As you read this, WMG’s sharpest minds are poring over “confidential” financial information from Believe in a closed-off ‘data room’ – i.e. stuff you wouldn’t be able to find in public financial reports.

Depending on what they find, Warner could table a bid for Believe worth EUR €17-plus per share – valuing the French company at more than USD $1.8 billion.

This process is a risk for Believe: If WMG ultimately walks away from the ‘data room’ unsatisfied – and declines to make an official approach – the French company will have handed over sensitive material about its business to a clear market rival.

One thing’s for sure: With or without Believe, organically and/or via acquisition, WMG leader Robert Kyncl is laser-focused on opportunities for Warner in the independent artist/label space.

In a note to staff at the top of this year, Kyncl wrote that one of his priorities for the next decade was to invest WMG’s resources in expanding the firm’s distribution relationships, as well as its publishing administration business.

“We are building scaled and highly effective distribution infrastructure so that we can radically and efficiently grow the large ‘middle class’ of artists while our frontline labels can remain focused on artists with the highest potential,” said Kyncl.

As such, if Kyncl and his team choose not to table an offer for Believe, WMG may seek material acquisition opportunities elsewhere, with attractive targets potentially including the likes of Downtown Music, OneRPM, SoundCloud, Stem, TooLost, and others.

The more likely scenario, though – following all the recent fuss* – is that WMG does launch a bid for Believe in the coming days, rivaling an existing takeover proposal for the company from a consortium led by Believe founder, Denis Ladegaillerie.

(* Said ‘fuss’ included an intervention from the AMF, France’s equivalent of the SEC, to clear the path for a potential Warner bid, following an attempt by Ladegaillerie’s…

Click Here to Read the Full Original Article at Music Business Worldwide…


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