Sony Corporation announced today that is has signed a deal to acquire Mubadala Investment Company’s 60% equity interest in EMI Music Publishing. The deal will raise Sony’s stake in EMI to around 90%, based on an enterprise value of $4.75 billion.
As a result of the transaction, Sony will indirectly own approximately 90% of the equity interest in EMI Music Publishing and it will become a consolidated subsidiary of Sony. The closing of the transaction is subject to certain closing conditions, including regulatory approvals.
While the final purchase price to be paid by Sony for all of Mubadala’s equity interest in EMI Music Publishing is subject to customary closing adjustments, the total cash consideration Sony expects to pay to consolidate EMI Music Publishing is approximately $2.3 billion.
Kenichiro Yoshida, President and CEO, Sony Corporation said: “We are thrilled to bring EMI Music Publishing into the Sony family and maintain our number one position in the music publishing industry. I would also like to convey my gratitude to Mubadala, our equity partner in EMI Music Publishing, for sharing our long-term perspective on the potential success of music publishing and their support as we grew the business. The music business has enjoyed a resurgence over the past couple of years, driven largely by the rise of paid subscription-based streaming services. In the entertainment space, we are focusing on building a strong IP portfolio, and I believe this acquisition will be a particularly significant milestone for our long-term growth.”
The purchase staves off what could have been a contentious bidding process, should Mudabala have opened up its investment share to other potential buyers. According to sources, Warner Music Group owner Len Blavatnik was hot on the property, as were other music companies. But with Sony already owning a significant portion of EMI, its ideal situation was to keep intact as much of Sony/ATV as possible — preferably, all of it. Ultimately, says an insider, the publishing company is but a small “kernel” of Sony’s overall business, though it is a growing sector. Sony/ATV in particular has seen growth of 100% in the last five years under chairman Marty Bandier.
The deadline for Mubadala to accept bids was the end of May, with the month of June earmarked for a review.
In 2012, Bandier led the effort to acquire EMI’s publishing unit — bringing in 1.3 million copyrights for songs by Carole King, Norah Jones, Motown classics, and standards like “Somewhere Over the Rainbow” — in a deal valued at $2.2 billion. At the time, Sony/ATV operated as a joint venture with the Michael Jackson estate (in January 2016, Sony/ATV exercised a buy-sell option to acquire the 50% it didn’t own — the price tag: $750 million) and, together, the two entities claimed 40% of EMI Music Publishing, with Sony/ATV taking a fee of 15% of NPS (Net Publisher Share) to administer the EMI copyrights. Holding the other 60% was a consortium of investors including the Jackson estate (with 10% ownership), Mubadala, Jynwel Capital, Blackstone Group’s GSO Capital Partners and David Geffen.
Since that acquisition, Sony/ATV has been the top publisher in each quarter except one. The company is the world’s largest music publisher, with songs by The Beatles, Bob Dylan, Marvin Gaye, Michael Jackson, Leonard Cohen, Alicia Keys, Lady Gaga, Carole King, Kraftwerk, Joni Mitchell, Willie Nelson, Queen, The Rolling Stones, Sting, Ed Sheeran, Taylor Swift, Kanye West, Hank Williams and Stevie Wonder among the thousands in its repertoire.
Hani Barhoush, Head of Mubadala Capital, said: “EMI has been a successful investment for Mubadala and I would like to personally extend my appreciation to the leadership at Sony and Sony/ATV, who have been instrumental in administering the EMI catalog as well as shaping the music landscape on a global basis. They have been tremendous partners to us.”
Adib Mattar, Head of Private Equity for Mubadala Capital and Chairman of EMI Music Publishing, said: “EMI Music Publishing represents one of the world’s largest and most diverse catalog of copyrights with iconic songs that span every decade over the last one hundred years. Writers and artists only stand to benefit under consolidated ownership and should feel proud to be part of the Sony family. The sale of our consortium’s interest in EMI Music Publishing represents a milestone for Mubadala and our private equity business.”