SBK Records’ recent hot streak on the charts has resulted in a plan by parent Thorn EMI to purchase the remaining 50% of the company, contingent on stockholders’ approval.
On completion of the deal, cash payments will be made to SBK Records Prods. for the outstanding share of the joint venture and to chairman/CEO Charles Koppelman and prexy/chief operating officer Martin Bandier under terms of new employment contracts. Total initial consideration payable is about $26 million, plus the return of EMI’s initial $5 million investment.
Deferred consideration also will be payable to SBK, calculated on multiples of sales and profits achieved by the diskery averaged over calendar years 1991,1992 and 1993. Any deferred consideration will be payable in 1994.
Based on forecasts of SBK sales and profits, EMI estimates the deferred consideration payable could be about $100 million, but not more than $400 million. EMI has the option of satisfying the deferred consideration either in cash or through the proceeds of a vendor placing of new Thorn EMI ordinary shares.
SBK has been one of the industry’s most remarkable success stories since its launch in June 1989 as a joint venture between EMI Music and SBK Record Prods. Platinum albums were scored by Vanilla Ice, Wilson Phillips, Technotronic and the first “Teenage Mutant Ninja Turtles” soundtrack disk; currently the sequel’s soundtrack album and Jesus Jones’ “Doubt” LP show significant chart action.
SBK was formed in the wake of a deal made by Koppelman and Bandier, along with then-partner Stephen Swid, to purchase CBS Songs in 1986 for $125 million, which was sold to Thorn EMI in 1989 for $337 million. The SBK joint venture followed, with Swid cashing out.
Completion of the acquisition is conditional on approval by Thorn EMI shareholders. That approval will be sought at an “extraordinary general meeting,” to be held immediately after the company’s July general meeting.