Sunday, June 7, 2020

Warner Music Valuing Company at $12.75 Billion

Warner Music Group on Wednesday priced its much-anticipated initial public offering at $25 per share, at the higher end of the $23-$26 range and valuing the company at $12.75 billion. The music major’s shares will trade on Nasdaq under ticker symbol “WMG.”

The IPO priced 77 million shares of Class A common stock, up from 70 million originally planned. That raised more than $1.9 million for shareholders, up from the original target of as much as $1.8 billion. The company will have 510 million shares outstanding after the IPO, valuing it at $12.75 billion.

Warner Music, owned by Len Blavatnik’s Access Industries, had filed for its IPO in February, with Morgan Stanley, Credit Suisse and Goldman Sachs acting as the joint lead underwriters. Blavatnik’s Access Industries acquired the music giant in 2011 for $3.3 billion.  

Upon completion of the initial offering, Warner Music will have two types of common stock, Class A and Class B, the latter of which is held by Access Industries and will represent 99.2 percent of the total combined voting power of outstanding common stock following the offering. Because Access will control a majority of combined voting power, Warner Music said it will be a “controlled company” and may elect to not comply with certain governance standards under Nasdaq rules.

Warner Music’s recorded music division generated $3.84 billion of revenue in fiscal year 2019, representing 86 percent of total revenue, according to a previous regulatory filing. The division is home to such artists as Ed Sheeran, Bruno Mars and Cardi B and includes storied labels like Atlantic, Elektra, and the recently rebranded Warner Records.

Its publishing arm, Warner Chappell Music, has a catalog of more than 1.4 million copyrights, including from songwriters Twenty One Pilots, Lizzo and Katy Perry. It generated $643 million of revenue in the latest fiscal year, or 14 percent of total revenue. The company also owns global music distribution firm Alternative Distribution Alliance, live music app Songkick, EMP Merchandising and UPROXX.

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