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Warner Music progresses with IPO amid rumours of Saudi Arabia deal

By | Published on Monday 11 May 2020

Warner Music

Warner Music last week confirmed that it has been approved for an Initial Public Offering on the Nasdaq stock exchange. That confirmation came as rumours started to circulate that the nation of Saudi Arabia was also interested in buying the major music company.

Current owners of the Warner Music Group, Len Blavatnik’s Access Industries, announced plans for an IPO back in February. Access seemed interested in retaining a majority stake in the music company, but was looking to raise cash by selling off a slice of the business.

It seemed likely that Blavatnik was following the lead of Universal Music owner Vivendi, which is also in the process of selling minority stakes in its big music company, seemingly to capitalise on the renewed interest in music rights on the back of the streaming boom.

COVID-19 delayed Warner’s IPO plans a little as the stock markets reacted to the pandemic. But it seems the plan is still on, with a filing made to the US Securities & Exchange Commission on Thursday confirming the Nasdaq approval.

That filing states: “We have been approved to list our Class A common stock on Nasdaq. We and the selling stockholders negotiated the initial public offering price per share with the representatives of the underwriters and, therefore, that price may not be indicative of the market price of our Class A common stock after this offering. We cannot assure you that an active public market for our Class A common stock will develop after this offering, or, if one does develop, that it will be sustained”.

Meanwhile, The Hollywood Reporter has run a report saying that Saudi Arabia’s Public Investment Fund is also interested in buying some or all of the Warner music company.

The often controversial nation’s fund confirmed last month that it had made investing in the entertainment sector a current priority. Shortly after that it emerged that said fund had bought up 5.7% of the stock in live entertainment giant Live Nation, the share price of which has taken a hammering in recent weeks as a result of the COVID-19 shutdown.

Perhaps aware that Saudi Arabia’s political stances on a plethora of issues are controversial in the Western world – and especially among the more liberal creative community – the Public Investment Fund stressed it planned to be a passive investor in Live Nation.

If it were to attempt to directly buy Warner Music – or even wait until the IPO and buy up stock on the open market – Saudi Arabia’s involvement in the record company and music publisher would likely prove controversial.

Talent agency group Endeavor was forced to cancel a $400 million investment in its business by the Saudi Public Investment Fund after the October 2018 murder of Saudi Arabian dissident and Washington Post columnist Jamal Khashoggi, who was killed by agents of the Saudi government at the country’s consulate in Istanbul.