KKR sells BMG stake to Bertelsmann

Earlier reports estimated that Bertelsmann would have to part with roughly €500m in order to secure the remainder of BMG from KKR.

Bertelsmann will now operate BMG as a wholly-owned subsidiary. The transaction, which is subject to regulatory approval, is scheduled to close during the first half of 2013.

KKR has been busy returning large sums of cash to investors recently: the US firm recently sold shares in another German media company, ProSiebenSat.1, a television broadcaster it held along with Permira.

The GP stated it was particularly pleased with the outcome of the investment and that it would look to develop businesses in partnership with corporate groups more often in the future.

Previous funding
KKR initially invested in the joint venture in 2009 – Bertelsmann secured 49% while KKR took 51%. KKR initially invested €50m and agreed to inject a further €200m over the following five years from its Europe III Fund.

BMG then set out to buy several music catalogues, including the acquisition of British music publisher Chrysalis for £107.4m in 2011. It also purchased music publisher Bug Music from Spectrum Equity Investors and Crossroads Media for more than $300m that same year. BMG, however, failed to secure EMI Music assets sold by Universal Music recently.

Company
BMG is a group of music companies focused on the management of music rights, covering rights administration, development and exploitation. BMG has established a presence in eight core markets since 2009 and represents the rights of more than a million songs and recordings.

The Berlin-based business expects revenues of €350m this year, according to reports.

People
Philipp Freise represented KKR on the transaction. Hartwig Masuch is CEO of BMG.

Advisers
Vendor - Citigroup (M&A).
Acquirer - JP Morgan (M&A).

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