French Indie Consortium Takes Aim At ‘Destructive Consequences’ of Warner Music’s Believe Buyout Plans, Urges Regulatory Action

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warner music believe deal
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Paris, France, where Believe is headquartered. Photo Credit: Luca Micheli

A French indie consortium is speaking out against Warner Music Group’s push to acquire Believe, expressing the belief that the TuneCore parent “must remain independent.”

Paris’ Union of Independent French Phonographic Producers (UPFI), in which Believe itself is a member, just recently took aim at the major label’s attempt to scoop up the Sentric owner.

In brief, this takeover attempt, which we’ve covered in detail, followed the mid-February announcement of a separate buyout spearheaded by a consortium featuring Believe head Denis Ladegaillerie.

While Ladegaillerie and other existing Believe stakeholders proposed paying €15 per share to take the business private – the 19-year-old entity only listed on the Euronext in the summer of 2021 – a mystery buyer floated a possible €17-per-share or higher price. Said mystery buyer was subsequently revealed to be the initially mentioned Warner Music Group.

Predictably, though, Robert Kyncl-led WMG’s plan wasn’t particularly well-received by the Ladegaillerie consortium, which attempted to expedite its own Believe takeover. Believe’s ad-hoc board – consisting of the sole three individuals without ties to the consortium, that is – then deferred to a French regulatory agency to inquire about the legality of this effort to speed up the privatization.

In more words, this agency communicated that the consortium’s waiver violated securities laws, we reported last week. The determination set the stage for WMG to receive the previously sought due-diligence information and then submit a bid for Believe. The ad-hoc board settled on a Sunday, April 7th, deadline for the official offer.

Now, with a Believe acquisition possibly in the cards for WMG – and with the Association of Independent Musicians having already expressed concerns about the potential play – the aforesaid Union of Independent French Phonographic Producers is making clear its reservations.

As that 31-year-old organization sees it, WMG’s “hostile” pursuit of a controlling Believe interest, if successful, will bring about “destructive consequences.” The target company “embodies a model of success and resistance to the worrying phenomenon of consolidation,” UPFI drove home, pointing to Sony Music’s deals for AWAL and The Orchard as proof.

Regarding UPFI’s specific worries, WMG’s ownership of Believe would compromise the latter’s future investments in “the local production of new releases” and lead to layoffs given the major label’s existing capabilities and recent focus on personnel reductions.

“The global music market, already largely dominated by an oligopoly of three majors,” UPFI spelled out, “can only suffer from the disappearance of independent companies which manage to create and popularize an alternative model.

“To preserve investment in music, the diversity of economic models and French cultural and economic sovereignty, we call on the Government to show its support for Believe,” UPFI concluded.

Regulatory considerations aside, the coming week and change should reveal WMG’s precise plan of action and the consortium’s response. As noted, the French business’s ad-hoc board has set a deadline of this coming Sunday for the major to submit a bid – a bid that is seemingly all but guaranteed given Warner Music’s decidedly public declaration of interest in a purchase.

When the market closed today, Believe stock (BLV on the Euronext Paris) was worth a 52-week high of €16.92 per share, well above the consortium’s offer price.