UPDATED: As the music-rights acquisition spree led by Hipgnosis, Primary Wave, Round Hill and others continues to heat up, Warner Music has thrown its hat into the ring, notifying Wall Street Monday that its acquisition group has raised $250 million via a private offering, noting that it “intends to use the net proceeds of the offering to fund a portion of aggregate cash considerations of certain acquisitions.” The news was first reported by Music Business Worldwide.
While Warner has invested in assets ranging from the tech company IMGN and the live-music app Songkick to the publications like HipHopDX and Uproxx, a source confirmed to Variety that the objective of the new offering is repertoire, and is in the process of acquiring two catalogs, according to an SEC filing.
“In early October we completed an acquisition for certain music assets, and we recently came to an agreement in principle regarding a second acquisition regarding certain other music and music-related assets… for aggregate cash consideration of approximately $338 million.
“We intend to fund such aggregate cash consideration with the proceeds of this [debt] offering and approximately $90 million of cash on hand. For the twelve months ended September 30, 2020, we estimate that we would have reported incremental additional aggregate revenue and Adjusted EBITDA for these assets of $6 million and $37 million, respectively.
“Closing of the Acquisition Transaction is subject to negotiation, execution and delivery of definitive documentation, which we currently expect to be subject to customary conditions and is expected to occur after the closing of this [debt] offering.”
Warner Music launched its IPO in June after a delay of several weeks due to the COVID-19 pandemic. Its initial public offering price of $25 per share for a market capitalization value of around $12.7 billion — which rose 15% to nearly $15 billion in early trading, although it has vacillated in the ensuing weeks and is currently around $30 per share.
Earlier this month, news broke that New York-based publisher Round Hill Music is aiming to raise $375 million for its new royalty fund when it on the London Stock Exchange in November. According to reports, it intends to purchase a portfolio of 120,000 songs from 40 catalogs by artists including the Beatles, Celine Dion and the Rolling Stones.
While the music industry, and live entertainment in particular, have been deeply damaged by the pandemic, recorded-music and music publishing have proven to be stronger assets and in many cases have grown in value, a situation further driven by Hipgnosis’ aggressive move into the industry over the past two years. It has spent more than $1 billion on catalogs since mid-2018 and is announcing several new acquisitions per month. Warner’s move seems likely to heat up the market even more.