With a three month delay due to the coronavirus crisis, Warner Music has confirmed that it will soon launch its initial public offering with 70 million Class A shares valued between $23 and $26.
This would total a worth estimated between $1.61 billion and $1.82 billion.
In a post-COVID era where lockdown pushed consumers to consume music online, hence benefiting Apple iTunes and Amazon Music, Warner is aiming to get the upper hand among an industry where it once was the leader.
“WMG”, the largest 2020 New York IPO
On May 26th, iconic record label Warner Music Group announced it will launch on the U.S stock market the biggest initial public offering in the country so far for this year.
The third-largest recording label will have shares ranging from $23 to $26 for 70 million Class A shares, estimating at a value at $13.26 billion.
According to Reuters, this announcement represents a “rarity in IPOs” as most of the shares are “owned by billionaire Len Blavatnik’s Access Industries”, who is selling his own shares.
As the New York Times adds, “Access will retain 99% of voting power through its ownership of a separate class of stock”.
Morgan Stanley, Credit Suisse and Goldman Sachs, Warner’s underwriters “have the option to purchase an additional 10.5 million shares within 30 days”, suggested the newspaper.
Nine years ago, Warner Music was sold for $3.3 billion. Now it could be worth $16 billion. https://t.co/5nJ3FWJLK4
— Ben Sisario (@sisario) May 26, 2020
Chinese Tencent Will Invest $200 Million
According to the Wall Street Journal, Chinese Internet Tencent Holdings Ltd. “is discussing an investment of $200 million” ahead of WMG’s IPO planned to happen next week.
“Warner Music is also working to line up institutions that, along with Tencent, would serve as anchor investors contributing a total of more than US$1 billion toward a fundraising goal of as much as US$1.8 billion”, confirmed a confidential source to Reuters.
Warner Music Group moved forward with plans for its initial public offering, saying it would sell 70 million shares at a target price range of $23 to $26 each. The IPO would value the music major at $12.5 billion at the midpoint of the range. Details: https://t.co/RN5Pxcgtwk
— The Hollywood Reporter (@THR) May 26, 2020
Surfing on the streaming opportunity
If Warner Music’s IPO has decided to launch this year, it has a lot to do with the digital industry.
As the New York Times analyzes, Warner Music “tries to cash in on the streaming boom with a listing that would value it at up to $13.3 billion”.
Read more on Alvexo: “European Markets Unlock as Lockdown Ends”
Warner’s portfolio is available on the most powerful online music streaming services, such as Amazon Music, Apple Music, Spotify, and French-founded Deezer, which is more than 50% owned by Warner.
Nowadays, online streaming represents more than 80% of music licensing in the United States according to the Recording Industry Association of America.
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