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More speculation over KKR’s stake in BMG

By | Published on Wednesday 20 February 2013


German media firm Bertelsmann is in “advanced talks” to buy equity outfit KKR out of the BMG music rights company, or so says the New York Post. Though the paper admits that talks regards when, exactly, KKR will exit its joint venture with Bertelsmann have been ongoing for over a year now. But, says the Post, a deal is “imminent”, though talks could “still fall apart”. Price, it reckons, is the issue.

KKR came on board as a partner in the v2 BMG company, launched by Bertelsmann in 2008 after the sale of the original BMG music publishing and record companies to Universal and Sony respectively, almost straight away, and its investment helped the new business grow rapidly through a series of acquisitions, perhaps most notably the Chrysalis publishing business, and more recently the Mute and Sanctuary recordings catalogues.

As a private equity outfit, KKR would always have planned to exit the venture after a number of years, and there has been speculation that exiting is imminent for a while now.

At one point the Post suggested that KKR would escalate its exit if BMG didn’t secure the Parlophone Label Group, the big chunk of EMI in Europe that Universal was forced to sell when it bought the wider EMI record company last year. Though given much of the PLG didn’t really fit in with BMG’s business model, and no private equity house is going to approve of bidding to win at any cost, that seemed unlikely.

But whatever, the Post’s sources say that Bertelsmann boss Thomas Rabe has been increasingly talking about wanting to take full control of BMG in recent weeks, while adding: “[Bertelsmann] are very close to something with KKR, and the relationship is amicable. They will exit at a good multiple”.

No one official has commented as yet.