Warner Music Confirms Interest in Believe Buyout, Says Denis Ladegaillerie-Led Consortium ‘Waiver Violates a Number of Rules’

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Warner Music Group head Robert Kyncl. Photo Credit: WMG

Last week, Digital Music News was first to report that Believe (Euronext: BLV), which a consortium featuring CEO Denis Ladegaillerie is looking to take private, had received word of a superior buyout proposal. Now, Warner Music Group (WMG) has identified itself as the possible purchaser.

WMG today revealed that it’s the heretofore unknown potential buyer responsible for outlining a bolstered offer before Believe’s ad-hoc board – consisting of the three members who don’t have an interest in the mentioned consortium or the involved companies, TCV and Sweden’s EQT Partners.

Mid-February saw said consortium propose a €15-per-share buyout of Believe, and at the time, the price marked a modest boost from BLV’s value on the open market and an even bigger increase from its 52-week low. Additionally, evidence pointed to a relatively quick completion of the process and the French company’s corresponding exit from the Euronext.

One week back, however, the ad-hoc board disclosed a possible €17-per-share or higher suggested purchase price “from an interested party,” explaining in more words that it would engage in related discussions and provide an update in due course.

As noted at the outset, Warner Music has taken the opportunity to confirm its interest in scooping up Believe, indicating that it had in fact kicked off discussions with the ad-hoc board late last month.

“WMG reaffirms its interest in” purchasing Believe, reads the message that the major label emailed DMN early this morning, claiming also that it and not the consortium “would provide Believe with strategic support and financial stability to help the development and growth of the” business. Meanwhile, the higher-priced buyout “could be for cash only,” Robert Kyncl-led WMG relayed.

Notably, Warner Music addressed as well the consortium’s waiver of an independent expert report and a subsequent ad-hoc-board recommendation regarding the privatization attempt. Upon learning of the superior offer, the consortium, evidently in an effort to expedite the process, signaled that it would “waive” the ad-hoc board’s findings and the underlying report, according to the formal release on the matter.

But “WMG considers that such a waiver violates a number of rules of French securities regulations which are meant to protect shareholders.” Furthermore, the Big Three label is of the belief “that the validity of such [a] waiver could be challenged.”

Time will tell whether that’s the case – the consortium was previously said to have closed BLV purchase agreements with several leading stakeholders – but the market has responded enthusiastically to the twist in any event. At the time of this writing, BLV was hovering around €16.30, after hitting a 52-week high of €16.70 shortly following the start of trading.

As to where the situation goes from here, Warner Music says it’s still “awaiting access to the due diligence information” that it requested last month. These details are “key to allow it to submit a formal proposal” for Believe, which is scheduled to post its 2023 financials next Wednesday, March 13th.