LONDON (Reuters) - U.S. media conglomerate Viacom has teamed up with private equity group Apollo to submit an offer for BMG Music Publishing in a bid battle that could top 1.5 billion euros (1 billion pounds), sources close to the matter said.
BMG Music Publishing, which owns the rights to thousands of songs including hits by Christina Aguilera and Coldplay, is being sold by German media conglomerate Bertelsmann to help finance a 4.5 billion-euro buyback of a minority stake in the company.
The Viacom/Apollo group submitted its offer by a deadline of Thursday, the sources said on Friday. Warner Music Group also bid, and Vivendi's Universal Music was also planning to turn in an offer, the sources said.Bertelsmann originally sent financial information about BMG Music Publishing to 15 suitors, and this group was later halved after the initial bidding.
Other suitors originally in the frame included a consortium of EMI Group with U.S. buyout firm Kohlberg Kravis Roberts & Co, although one of the sources said the pair did not submit an offer by Thursday's deadline. Sony Music had also decided not to bid, the sources said.
It was not immediately clear whether Chicago-based private equity firm GTCR, which sources said was mulling its options, had submitted a bid.
One of the sources said BMG, which is being advised by JP Morgan and Citigroup, would sift through the bids over the next week to ten days and then inform prospective buyers as to the next stage.
Music publishers earn money from CD and download sales, in what are known as mechanical royalties. They are also paid when songs are performed live or when they are played in films or TV programmes, which means publishers have been shielded from some of the piracy problems that have plagued the music industry.
Bertelsmann reported that music publishing generated 372.4 million euros of revenue in 2005, but it did not disclose operating profit or margins. The music-publishing arm, established in 1987, "had its most successful year to date, again generating double-digit return on sales," Bertelsmann said.
Universal Music has been considered by many in the industry as a frontrunner in the auction in part because it could likely find big cost savings by combining BMG's massive operation with its own. Although it is the world's biggest seller of recorded music, Vivendi's publishing arm trails some of its rivals. Vivendi also said earlier this year it is looking to expand its music-publishing business by acquisition.
BMG, Warner, EMI and the private equity firms all declined to comment or could not immediately be reached for comment.
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