Access Industries has reached an agreement with Warner Music Group Corp. to buy the company in a deal valued at $3.3 billion, the companies announced Friday.
The buyer will pay $8.25 a share, which is 4.4 percent higher than the pre-announcement closing price but 75 percent higher than when the bidding was announced in January. It will take on about $1.9 billion in debt held by Warner Music.
Access Industries was founded and is headed by Russian-born billionaire Len Blavatnik. It has interests in natural resources and chemicals, media and telecommunications, and real estate. It is headquartered in New York.
Warner, considered the world’s third-largest recording company, is based in New York City but has significant operations in Burbank and Santa Monica.
Blavatnik, 53, is a former Warner Music director who was part of the group led by current Chief Executive Edgar Bronfman Jr. that purchased the company from Time Warner Inc. in 2004 for $2.6 billion. Blavatnik still has about a 2 percent stake in the public company.
“I am excited to extend my longstanding involvement with Warner Music,” Blavatnik, said in a statement. “It is a great company with a strong heritage and home to many exceptional artists.”
Blavatnik beat out two other groups of suitors in the final round of bidding, including billionaire brothers Tom and Alec Gores, who each run their own private equity firms in Los Angeles. Also still in the running earlier this week was a group comprised of Sony/ATV Music Publishing LLC., billionaire Ronald Perelman and financial services firm Guggenheim Partners LLC.
The sale comes as major record labels such as Warner Music – whose artists include Eric Clapton, Red Hot Chili Peppers, and Kid Rock – are struggling to remain profitable as the digital music revolution has devastated sales of CDs and other older music formats. It’s anticipated that Access Industries will have to cut staff and possibly shed some non-core music labels to make the deal profitable. The company now has about 3,700 employees.
Warner shares were up 19 cents, or 2 percent, to $8.09 in midday trading on the New York Stock Exchange.
