The Warner Music Group, the home of stars like Ed Sheeran, Cardi B and Led Zeppelin, announced on Tuesday that it would proceed with an initial public offering that would value the company at up to $13.3 billion. The listing, planned for Nasdaq, would be the latest sign of the dramatic turnaround in the fortunes of the music business. Warner was bought for $3.3 billion in 2011 by Access Industries, the conglomerate controlled by the Russian-born billionaire Len Blavatnik, when the industry seemed to be on a terminal decline.
Since then, the music business has been reinvigorated by streaming services, leading investors to cash in. Last year, the Chinese company Tencent Holdings bought 10 percent of the Universal Music Group at a price that valued Universal at more than $33 billion. The Warner I.P.O. would float 70 million shares, or 13.7 percent of its common stock, for between $23 and $26 a share — valuing the company’s equity from $11.7 billion to $13.3 billion.
The Ukraine-born business magnate bought Warner Music through Access Industries in 2011 for $3.3 billion. It was previously controlled by a trio of private-equity firms—Thomas H. Lee Partners, Bain Capital Partners and Providence Equity Partners—together with the company’s then-chief executive, Edgar Bronfman Jr., who bought the company in 2004 from what was then Time Warner Inc. for $2.6 billion.
The value of music assets has since skyrocketed. The music industry, decimated starting in 2001 by online piracy and the collapse of CD sales, has been on a tear for four years, with revenue from subscriptions to streaming services such as those offered by Spotify Technology SA and Apple Inc. turning around the fortunes of record companies. Global recorded-music revenue grew 8.2% last year to $20.2 billion, according to the International Federation of the Phonographic Industry, with streaming accounting for more than half of the total for the first time.
In April, Warner Music reached a new global-licensing agreement with Spotify, ending a contentious years long negotiation between the streaming company and the label. Warner Music’s labels include Elektra Records, Atlantic Records and its flagship Warner Records. It also owns Warner Chappell Music, the third-largest music publisher.
Todd Horwitz Chief Strategist BubbaTrading.com
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