Vivendi SA, the owner of Universal Music Group, agreed Wednesday to pay $2.09 billion to acquire BMG Music Publishing Group from media company Bertelsmann in a deal that will give the French company the world's largest music publishing catalog and songs by artists such as Coldplay and Robbie Williams.
Vivendi beat out a group of other bidders that reportedly included Warner Music Group Corp., Viacom Inc. and EMI Group PLC. Its Universal division was thought to have the nod from the beginning, because due to its smaller music publishing arm it was likely to face fewer regulatory constraints than EMI or Warner.
Universal Music is already the biggest recorded music company in the world, and the BMG unit is expected to be absorbed by the Universal publishing group.BMG Music Publishing owns the rights to more than 1 million songs by recording artists such as Nelly, Maroon 5, Christina Aguilera, Justin Timberlake and Mariah Carey, as well as classic hits by the Beach Boys, Barry Manilow and other entertainers.
Some analysts said Vivendi paid too much for the deal and questioned its strategic rationale. Under the former leadership of Jean-Marie Messier, Vivendi embarked on a huge expansion that transformed it from a water utility to a global media conglomerate. But the company was left with a mountain of debt and was forced to sell some assets.
The deal must be approved by U.S. and EU regulators, and they are likely to scrutinize it particularly closely, analysts warned
In Brussels, the independent record label group IMPALA expressed concern the proposed sale would further damage competition in recorded music, but said it had not yet decided whether to make a formal complaint to EU regulators.
IMPALA's legal challenge to the Sony-BMG merger led to an EU court ruling that EU regulatory clearance for the deal was illegal, forcing regulators to screen the tie-up again.
BMG Music Publishing's revenue totaled $475 million (371 million euros) in 2005.
Recommended Comments