Viacom, Warner, Universal Bid for BMG Publishing

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LONDON — Warner Music Group Corp. (WMG), Viacom Inc. (VIA), and Universal Music Group are among those to have bid for BMG Music Publishing, according to people familiar with the situation.

German media giant Bertelsmann A.G. (BRT.YY) is selling the unit to help finance a EUR4.5 billion ($5.8 billion) buyback of a minority stake in Bertelsmann. The final round of an auction for BMG closed Thursday.

Viacom Inc. (VIA) has teamed up with private equity group Apollo Management LP (AM.XX) and boutique adviser Zelnick Media, headed by former BMG executive Strauss Zelnick, a person familiar with that bid said.

Warner Music Group (WMG), along with private equity backers Providence Equity, Bain Capital (BCI.XX) and Thomas H. Lee Co. (THL.XX), has also submitted a bid, according to a person familiar with the situation.

Universal Music Group, a unit of French media conglomerate Vivendi (V), has made an offer for the company alone, a person familiar with the situation said.

Chicago-based private equity group GTCR also submitted an offer, a person familiar with the situation said.

Uncertainty surrounds the role of a partnership between Kohlberg, Kravis Roberts & Co. (KKR.XX) and EMI Group PLC (EMI.LN), the London-based record company. KKR and EMI were working on a bid, but it was unclear whether they had submitted an offer by the Thursday deadline. EMI and KKR both declined comment amid press reports the two companies hadn’t been able to agree deal terms.

A spokesman for Bertelsmann declined to comment on the auction. All bidding parties also declined comment.

Bertelsmann originally sent information memoranda to around 15 potential companies interested in the assets. Citigroup and JP Morgan, which are running the sale process, are expected to choose a bidder within the next week, people familiar with the situation confirmed. Citigroup and JP Morgan weren’t available for comment.

One person familiar with the deal said he believed bids were around the EUR1.5 billion level.

Universal, the world’s largest record company, is thought by analysts to be the most likely victor in the auction. As a trade buyer, it is thought to be able to find big cost savings. But due to its smaller music publishing arm, it is likely to face smaller regulatory constraints, analysts say.

EMI and Warner would both likely face antitrust issues, analysts and lawyers say.

One person familiar with the process said: “Bertelsmann needs to trade price with regulatory risk. The successful bidder may not be the highest bidder.”


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