Believe Board Taps French Securities Commission to Rule on Waiver Amid Intensifying Privatization Battle

is believe going private
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is believe going private
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The main office of France’s Financial Markets Authority. Photo Credit: Albert Bergonzo

Believe’s board has enlisted a French regulatory agency to determine whether a Denis Ladegaillerie-led consortium can expedite the privatization process despite a possible superior offer from Warner Music Group (WMG).

Believe’s ad-hoc board – consisting of the three board members without ties to the consortium looking to take the Euronext-traded business private – reached out to DMN with the news today. For a bit of quick background, the increasingly convoluted situation’s start can be traced to mid-February.

That’s when Believe’s aforementioned founder and CEO, Denis Ladegaillerie, announced plans to take the company private via the noted consortium, also featuring TCV and Stockholm’s EQT Partners. (Incidentally, Believe only began trading on the public market in June of 2021.)

We covered the consortium proposal in detail, including, among other things, a €15-per-share offer from the prospective purchasers. The latter also said they’d finalized deals with leading stakeholders to scoop up close to 60 percent of Believe shares, with Ladegaillerie putting up another 12 or so percent of shares.

Then, “a mandatory tender offer” at the same €15-per-share price point – a modest spike from the €12.40 BLV was fetching – would lay the groundwork for the acquisition of the remaining shares, according to the consortium.

Also outlined were plans to await an “independent expert” report on the buyout proposal’s merits, besides subsequent ad-hoc board approval and regulatory sign-off. This relatively relaxed schedule was seemingly tossed out the window when the ad-hoc board revealed it’d received indications of interest from a third party.

Said third party, later confirmed as Warner Music, claimed it’d pay a minimum of €17 per Believe share. From there, the consortium communicated that it would “waive” the ad-hoc board’s approval – rendering the above-described purchase of 60 percent of BLV shares subject just to regulatory approval.

Predictably, that didn’t sit right with Warner Music, which expressed the belief that “such a waiver violates a number of rules of French securities regulations which are meant to protect shareholders” and “could be challenged.”

Lastly, in terms of the episode’s specifics, the consortium in a subsequent release reiterated the perceived legality of the waiver and doubled down on plans to nab the remaining shares at €15 a pop. (BLV was worth a little over €16 at the time of this writing.)

Now, the ad-hoc board in a fresh release today maintained that the post-waiver block acquisition would put the consortium “in a position of majority control of Believe, regardless of the opinion of the board and of the report of the independent expert.”

And with close to 80 percent of Believe’s voting rights coming with the deals as well, they, “unless considered legally invalid, would prevent a competing bidder from acquiring control,” the ad-hoc board relayed.

In any event, the brass-tacks takeaway from the lengthy message is that the ad-hoc board has deferred to France’s securities commission, the Financial Markets Authority, to clarify whether the waiver complies with all relevant laws.

Until a decision is rendered (it’s unclear exactly how long this will take), the ad-hoc board will hold off granting WMG’s request for access to “confidential information” – access that the major label said would precede the potential submission of a formal offer.

Additional information about the multifaceted situation will presumably emerge during Believe’s Q4 and full-year 2023 earnings call, which is scheduled for this Wednesday, March 13th.