A US federal judge has refused to dismiss a lawsuit that accuses Universal Music Group‘s Christian music company of walking away from an agreed acquisition on the eve of closing.
The decision allows Reach Records, the independent label Lecrae co-founded in Atlanta, to pursue claims of breach of contract and misrepresentation against Capitol CMG, a subsidiary of UMG.
Capitol CMG had asked the court to throw out the case before trial, arguing that the two sides never entered a binding sale contract.
Judge Waverly D. Crenshaw Jr. denied that motion on Tuesday (July 21) in the US District Court for the Middle District of Tennessee.
“The story alleged by Reach is an old and familiar tale,” Crenshaw wrote in his opinion, which you can read in full here.
Reach alleges that Capitol CMG agreed to buy the label during 2025, then pulled out months later by telling Reach the agreed price was too high.
On August 8, 2025, the two companies signed a letter of intent (LOI) that recorded the purchase price and other terms of the deal, according to the complaint.
That letter stated the price “will not be subject to renegotiation by the parties absent material adverse findings during final due diligence,” the opinion says.
Before the LOI was signed, Capitol CMG President Brad O’Donnell told Reach co-founder and CEO Ben Washer that the investment committee of Universal Music Group would need to sign off on the transaction, according to the complaint.
The committee approved the deal and the “final” purchase price, Reach alleges.
The parties then completed five rounds of due diligence, during which no material adverse findings affecting the price were raised, according to the Reach complaint.
From August through September 2025, they exchanged drafts of a membership interest purchase agreement, with the agreed price unchanged, the filing states.
Then, on September 12, 2025, O’Donnell told Reach that “there was a layer of approval as to the Purchase Price,” the complaint says.
The agreed price, he said, was “too high due to its earnings multiple value,” and the Capitol CMG acquisition did not close.
In his opinion, Crenshaw found that Reach had done enough to take all three of its claims forward — breach of contract plus intentional and negligent misrepresentation.
“Accordingly, Reach has plausibly alleged the existence of an enforceable contract and CMG‘s breach,” the judge wrote of the breach-of-contract count.
“On the eve of closing, CMG pulls out of the deal because of the purchase price,” Crenshaw wrote of the misrepresentation claims.
“On the eve of closing, CMG pulls out of the deal because of the purchase price. It has the temerity to do so after its CEO tells Reach that the investment committee approved the deal as well as the Purchase Price.”
Waverly D. Crenshaw Jr., US District Judge
“It has the temerity to do so after its CEO tells Reach that the investment committee approved the deal as well as the Purchase Price.”
The judge added that the executive “either knew or should have known whether the purchase price was final, but he led Reach to believe it was, knowingly or oblivious to the truth until closing.”
If the price was truly an obstacle, Crenshaw wrote, Capitol CMG “was required to invoke the price-adjustment mechanism set out in Paragraph 1(b), not abandon the bargain it had already made.”
Reach has said publicly that it was Capitol CMG that proposed the deal, before it “reneged on a contract at the last possible minute.”
“We aren’t trying to be nasty about this, but believe it’s critical that major institutions are held accountable for their actions and can’t move without consequence toward the independent creative community,” Reach said in a statement to Billboard in December 2025.
Reach told Billboard the deal fell apart after eight months, by which point it had “altered parts of our business” in anticipation of the merger.
“We were literally at the finish line,” the label said. “It left us in complete shock.”
Founded in 2004 by Lecrae and Ben Washer, Reach Records specializes in Christian hip-hop and has released music by artists including Tedashii and Trip Lee.
Lecrae‘s Anomaly topped the Billboard 200 in 2014.
The alleged deal took shape during a period of growth for Christian music.
Christian/Gospel was the second-fastest-growing genre in the US in 2025, gaining 0.25 percentage points of market share and drawing 30 billion on-demand streams, according to Luminate data reported by MBW.
Capitol CMG, based in Nashville, is UMG’s Christian and gospel music company and sits within Capitol Music Group Nashville, part of UMG’s Interscope Capitol Labels Group.
Its roster includes Chris Tomlin, TobyMac and Tasha Cobbs Leonard, and it is led by Brad O’Donnell.
The dispute lands as UMG continues to buy across the independent sector.
In February 2026, the company’s USD $775 million acquisition of Downtown Music Holdings was cleared by EU regulators.
The ruling sends the Reach case into discovery, where both sides will exchange evidence ahead of any trial.
Neither Reach nor Capitol CMG had responded to Billboard‘s requests for comment as of Wednesday (July 22).Music Business Worldwide
