Warner Music Group Announces $351.06 Million Stock Sale — With Morgan Stanley Underwriting

Warner Music

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Access Industries, the parent company of Warner Music Group (NASDAQ: WMG), has announced plans to sell $351.06 million worth of stock in the Big Three record label.

Warner Music Group (WMG) unveiled the multimillion-dollar stock sale in a recent release, emphasizing at the outset that the New York City-headquartered label itself “is not selling any shares of common stock in the offering and will not receive any of the proceeds.”

Rather, “affiliates” of Len Blavatnik’s aforementioned Access Industries are cashing out of the 8,562,500 shares in question, pricing them at $41 apiece. (BBC named 64-year-old Blavatnik the richest person in the UK in 2021, with a £23 billion/$31.17 billion fortune.) Morgan Stanley – which bought over $100 million in Warner Music stock in September of 2021 – is acting as the offering’s underwriter, with an expected wrap date of tomorrow, January 6th.

Warner Music Group stock was worth $41.27 per share when the market closed yesterday, and a small after-hours decline then brought WMG to an even $41 to kick off trading today. The figure reflects a more than five percent dip since December’s end, but a roughly 37 percent jump since the major label returned to the public market in the summer of 2020.

Besides launching a $535 million senior note offering, Warner Music in mid-November revealed that it had achieved a 22 percent year-over-year revenue increase during the fourth quarter of its fiscal year, covering the three months ending on September 30th. This hike encompassed gains on both the publishing and recorded sides.

Also worth highlighting is that a number of analysts have upgraded their Warner Music Group stock ratings in recent weeks and months. Following late-November upgrades from Credit Suisse (to “outperform,” with a $50 target price) and Citigroup (“neutral,” $49 target price), for instance, Tigress Financial closed out 2021 by setting a $52 WMG target price.

And Jefferies Financial Group this week upgraded its WMG rating to “buy,” with a $50 target price. It bears mentioning, though, that Zacks Investment Research downgraded WMG to “sell” last month, with Bank of America having downgraded the stock to “underperform” and cut its target price from $53 to $42.

Like the other Big Three labels, Warner Music Group hasn’t hesitated to drop substantial sums on acquisitions as of late, spending a reported $400 million on Lyor Cohen-founded 300 Entertainment, a reported total of $450 million on David Bowie’s recorded and publishing catalogs, and hundreds of millions of dollars more on the recorded catalogs of Madonna and David Guetta.

2 Responses

  1. Tom Hendricks

    So why are music sales so bad? From 1955 to 1985 there were hundreds and hundreds of record companies competing. Now The Big Three Labels control the entire industry, prop up a few boring pop stars, and block out all new music. Join the music revolution!
    Hey Warner, Universal, Sony, your greed has ruined the music Industry. I think you should fire all CEOS,
    and issue an apology to the public!

    Reply
  2. Will

    Tom, you post the same diatribe, but fail to mention other very obvious factors that have made music near value-less. The rise in video games has created a tremendous distraction to those who used to look to music as their diversion. With the digital music boom, consumers look at music now as not a physical product they can touch and understand there is value, but as a file of ether that doesn’t create a sense of reality. While they have their problems and have contributed to diminishing the quality of music, solely blaming the labels for the ills of the industry is flawed.

    Reply

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