It's Official: Warner Music Sold To Access Industries For $3.3 Billion
May 6, 2011

As expected, Warner Music Group Corp. announced this morning that it has signed a "definitive merger agreement" with Access Industries, for Len Blavatnik's group to acquire WMG in an all-cash transaction valued at $3.3 billion. The purchase includes WMG's entire recorded music and music publishing businesses.

The purchase price of $8.25 per share represents a 34.4 percent premium over the volume-weighted average share price of $6.14 over the previous six months.

Under the terms of the merger agreement, WMG's stockholders will receive $8.25 per share in cash at the closing of the transaction. WMG's Board of Directors approved the transaction and recommended that WMG's stockholders approve the transaction. In addition to stockholder approval, the transaction is subject to the satisfaction of customary closing conditions and regulatory approvals. It is anticipated that the transaction will be completed in the third calendar quarter of this year.

WMG Chairman/CEO Edgar Bronfman, Jr. said, "We believe this transaction is an exceptional value-maximizing opportunity that serves the best interests of stockholders as well as the best interests of music fans, our recording artists and songwriters, and the wonderful people of this company. We are delighted that Access will be the new steward of this outstanding business. They are supportive of the company's vision, growth strategy and artists, while bringing a fresh entrepreneurial perspective and expertise in technology and media. Most importantly, Access supports Warner Music's commitment to our recording artists and songwriters who are the foundation of our current and future success."

Len Blavatnik, Chairman and founder of Access Industries, said, "I am excited to extend my longstanding involvement with Warner Music. It is a great company with a strong heritage and home to many exceptional artists. I look forward to working closely with the many talented people within the company."

Jorg Mohaupt, Head of Media at Access Industries, added, "The music industry is at an inflection point where digital adoption is rapidly gaining momentum. Warner Music, as one of the most progressive forces in the music business, is well positioned to capture this opportunity for music creation and distribution."

Scott Sperling, Presiding Director of WMG, said, "It has been our great pleasure working with the extraordinary team at Warner Music over these past seven years. The company has managed to significantly increase market share and profitability during our ownership period and consistently outperformed even during a challenging period for the industry. Len Blavatnik and Access are likewise deeply committed to the music business and we know that we will be leaving the company in good hands."

Following the closing of the transaction, WMG will become a privately held company and its stock will no longer be traded on the New York Stock Exchange. The company will retain the Warner Music Group name and will continue to operate out of its current facilities.

Thomas H. Lee Partners L.P. and its affiliates, Bain Capital Partners, LLC and its affiliates, and Edgar Bronfman, Jr., who together hold approximately 56 percent of the company's outstanding shares, have entered into a voting agreement with Access under which those stockholders have agreed to vote their shares in favor of the merger.

Access has secured committed financing from Credit Suisse and UBS Investment Bank. These funds, in addition to equity financing from Access, will finance the cash consideration to WMG's stockholders.

WMG noted that with the proposed transaction, it will not host a conference call to discuss results for the second quarter of fiscal 2011. The company expects to file its Quarterly Report on Form 10-Q for the period ended March 31, 2011 by May 10, 2011.




 
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Christopher K
APD/MD, KDND & KUDL
Sacramento

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