Is Warner Music Group actually going to launch a $1.8 billion+ takeover bid for Believe? We’ll know within 13 days.
On Monday (March 25), the Board of Directors of the Paris-born music company officially invited Warner Music Group to submit “a binding, unconditional and fully financed offer” for Believe.
Believe’s Board has given WMG just under two weeks to do so, asking that the latter company submit its offer no later than April 7, 2024.
That would be precisely one month after WMG announced publicly (on March 7) that it was potentially interested in making a bid for Believe.
This is the latest twist in an ongoing corporate saga.
It follows the news from over the weekend that French market regulator, the Autorité des Marchés Financiers (AMF), has intervened to remove a roadblock for a possible acquisition bid for Believe by WMG.
The AMF, France’s version of the Securities and Exchange Commission in the US, was asked by Believe’s board to adjudicate whether a particular move requested by a consortium led by the company’s founder/CEO, Denis Ladegaillerie, was within the confines of French financial law.
It ruled that it wasn’t. Had the AMF ruled the opposite, Warner’s potential interest in Believe would have effectively been dead in the water.
The Ladegaillerie consortium is comprised of two investment companies – TCV and EQT – plus Ladegaillerie himself.
This consortium announced on February 12 that they had tabled a EUR €15-per-share bid to acquire Believe and take it private. This bid valued Believe at around USD $1.6 billion;
The Ladegaillerie consortium noted at the time that it had already reached private agreements to acquire 71.92% of Believe via ‘Block Acquisitions’.
However, the Ladegaillerie consortium later told Believe’s board that it intended to “waive” a previously-announced condition for these ‘Block Acquisitions’ – one requiring the Believe board to issue an approval of the bid to shareholders (aka the “fairness opinion”), informed by independent experts.
Over the weekend, AMF Chair Marie-Anne Barbat-Layani declared in a letter to Believe’s board, obtained by MBW, that an attempt by the Ladegaillerie consortium to “waive” a previously agreed condition of its bid “infringes the guiding principles of public bid law” in France – “in particular the principles of fairness, transparency and the free play of bids and overbids”.
In a press release issued on Monday, Believe’s Board acknowledged the position expressed in the AMF Chair’s letter: that the waiver “was not compliant with the principles governing tender offers”.
The Believe Board added on Monday: “In light of this set of circumstances, the Board of Directors of Believe (with only its independent board members participating in the deliberation and in the vote) has determined to invite WMG to submit a binding, unconditional and fully financed offer (the “Binding Offer”) for Believe.”
Warner Music Group entered the fray in the takeover battle for Believe on February 21 when it privately contacted Believe’s board “to initiate discussions [regarding] a potential combination of Believe with WMG”.
On February 27, WMG told Believe’s board that it might be willing to value Believe at “at least” EUR €17-per-share based on currently available public information. A €17 per share offer would value Believe at around EUR €1.7263 billion (USD $1.872 billion).
However, WMG said it would only make a formal offer after receiving and reviewing what Believe deems “confidential information” regarding its finances. WMG then made a formal request for this “confidential information”.
Believe’s board told WMG on March 11 that it would not be handing over the “confidential information” that WMG requested regarding Believe’s finances while it awaited the AMF’s opinion.
Now, following the French regulator’s decision over the weekend about the legitimacy of the consortium’s “waiver”, Believe has agreed to provide WMG with access to its “data room“.
Included in that data room, according to the announcement on Monday is “a level of information consistent with the information provided to the Consortium, subject to appropriate confidentiality undertaking”.
Believe noted in its press release on Monday that, when determining whether or not to invite WMG to submit a bid “only its independent board members participate[ed] in the deliberation and in the vote”.
As MBW explained a couple of weeks ago, technically speaking, ‘Believe’s board’ as described throughout this article is in fact what’s called an ‘Ad-hoc Committee’, i.e. an exclusive group of those board Directors at Believe who aren’t personally entangled in Ladegaillerie and co’s bid.Music Business Worldwide