Warner Music 'sold for $3.3 billion'

Published May 6 2011, 15:56 BST  |  By Andrew Laughlin

Warner Music, the record label behind Cee-Lo Green, Bruno Mars and Plan B, has reportedly agreed to sell itself to Access Industries, the investment vehicle of billionaire Len Blavatnik, in a deal worth around $3.3 billion.

According to media reports, people with knowledge of the situation have confirmed that Blavatnik will pay $8.25 a share for Warner Music, a 4.4% premium on the company's closing share price today of $7.90.

Access Industries will also assume all of Warner Music's debt, estimated at around $2bn. An official announcement of the sale has not yet been made by either party, but it is widely expected to follow shortly.

Warner Music, one of the four major record labels, has been up for sale since January, with Blavatnik joined by Sony/ATV Music Publishing, and Tom & Alec Gores, who run their own private equity operation, in expressing an interest.

However, Blavatnik emerged as frontrunner to complete the deal due to his close links with Warner Music, as he previously sat on the company's board.

The deal would add another asset to the growing Access portfolio of investments, alongside stakes in Russian oil giant TNK-BNP and online sports rights company Perform.

Speculation is mounting that Blavatnik could follow up the Warner Music acquisition by combining the label with fellow major EMI, which is now owned by Citigroup after foreclosing on previous owner Terra Firma.

Blavatnik's biggest challenge will be finding the right business model to cope with the still floundering music industry, with CD sales continuing to fall, yet legitimate digital download revenues not increasing quickly enough to fill the gap.