KKR-backed BMG bolts on Bug Music for $325m

After winning an auction process run by JP Morgan Chase, BMG will now own the US-based company, which holds or manages the copyright to songs such as 'Fever' and 'The Real Slim Shady' and is said to boast an EBITDA margin of 21%. Founded in 1975, it has a net publishers share of more than $35m and attracted its new owner with its stable cash flows.

The deal comes at a time when BMG is also in the running to buy UK music company EMI, which Citigroup is selling for $3-4bn after taking control from Terra Firma in February. The music publishing sector is currently under duress due to a decline in  mechanical and performance rights.

KKR and Germany's Bertelsmann media group invested in BMG in July 2009. Bertelsmann acquired 49% of the joint venture, which included its own rights management unit. KKR took 51% and planned to invest an initial €50m and then inject a further €200m during the next five years from its Europe III Fund.

BMG went on to buy British music publisher Chrysalis for £107.4m in November 2010, which was in line with its investors' strategy to build a music rights management business through organic growth and acquisitions.

Berlin-based BMG began operating in October 2008 with a rights catalogue of about 200 artists. It employs around 30 people under the management of CEO Hartwig Musuch, and generated a turnover of approximately $14.3m in 2009.

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