Report: Thomas H. Lee Looking To Sell Its Warner Stock
Move May Have Triggered Warner To Explore Sale
January 24, 2011 at 3:35 AM (PT)
On FRIDAY (NET NEWS 1/14), ALL ACCESS reported WARNER MUSIC GROUP hired investment bank GOLDMAN SACHS to seek out potential buyers for the company, a process that will play out while WARNER continues to explore buying . The decision to hire GOLDMAN SACHS came after several suitors, including the buyout firm KOHLBERG KRAVIS ROBERTS, approached WARNER MUSIC's management in recent months about buying the company,
Now comes word that WARNER's hand might have been forced by THOMAS H. LEE PARTNERS, which according to a NEW YORK POST report, "recently informed CEO EDGAR BRONFMAN it was preparing to sell its stake," which sources peg at 35%.
How does this tie into the rumors that WMG is still looking to buy EMI? Sources have WMG spinning off its publishing arm, WARNER CHAPPELL, in order to pay down debt -- and then using what's left to acquire EMI. "If WARNER can sell WARNER CHAPPELL for a great price, it makes it easier [for it] to buy EMI in distress," NEEDHAM & CO. media analyst LAURA MARTIN said.
U.K.'s THE GUARDIAN adds, "GOLDMAN bankers are also working on a plan that would see WARNER sell its WARNER CHAPPELL publishing business to KKR, which has a music joint venture with BERTELSMANN of GERMANY. Under this scenario, WARNER would use the WARNER CHAPPELL sale proceeds to buy EMI's recorded music division for about £450m, and KKR would snap up EMI's publishing business."
"They want CITI and GUY [HANDS] to sit down and say 'Let's sell it to WARNER and get out,'" someone familiar with WARNER's thinking told THE POST. WARNER wants to buy EMI's publishing business and hopes to portray itself as friendly, the person said.