Is Warner Music Buying Believe? Board Green-Lights WMG Offer Following French Securities Commission Ruling

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Believe founder and CEO Denis Ladegaillerie. Photo Credit: Believe

Warner Music Group (WMG) has received regulatory approval to submit a bid for Believe, the board of which has provided the major label with confidential information and set an offer deadline.

Believe (BLV on the Euronext Paris) today penned an official release about the status of WMG’s offer, which dates back to March’s beginning. In the interest of brevity – we’ve covered the multifaceted episode from the outset – a consortium led by Believe CEO Denis Ladegaillerie revealed plans in mid-February to take the business private.

With investment firm TCV and Stockholm’s EQT Partners also part of this consortium, Believe was expected to be privatized at a modest bump to its per-share price. (The consortium claimed as well to have inked deals with leading shareholders to acquire a majority stake in the TuneCore parent.)

While the purchase process was beginning to play out – referring to a formal recommendation, based on an expert report, from the sole three Believe board members unaffiliated with the consortium – it emerged that a third-party had floated a better offer for Believe. Later identified as WMG, the major label indicated it would pay a minimum of €17 per share, up from the €15 per share proposed by the consortium.

Predictably, the move didn’t sit right with said consortium, which attempted to waive the expert recommendation – ostensibly meaning that the transaction only required regulatory approval. WMG maintained that the waiver violated securities laws, and Believe’s remaining board members therefore deferred to France’s securities commission to weigh in on the waiver’s legality.

Lastly, in terms of pertinent background details, WMG made clear that it would consider bidding after reviewing “due diligence information.” Running with these points, and particularly the securities commission’s findings, the government entity in a letter appeared to side with WMG.

“By exercising, in the aforementioned context, its faculty of unilateral waiver of the said suspensive condition,” a translation of the French-language letter reads in part, “stipulated for its sole benefit, while WMG had made known an expression of interest valuing the company Believe at least 17 euros per share, the consortium, which was aware of this non-public information, granted itself a decisive advantage in the success of its offer, in violation of the principles of loyalty, transparency and free play of offers and their bidding wars.”

Building on those comments, dated March 22nd, Believe’s three-person board today relayed that it had “determined to invite WMG to submit a binding, unconditional and fully financed offer” for the company.

Furthermore, the board has also confirmed that it will afford the Robert Kyncl-led label “access to a data room including a level of information consistent with the information provided to the Consortium.”

Lastly, on the timing front, the board has requested that the relevant Big Three label submit its binding offer on Sunday, April 7th, at the latest. At the time of this writing, Believe shares were worth €16.68 apiece – up substantially from about €10.50 a pop when 2024 began and, of course, higher than the price attached to the consortium’s offer.