Sony Corp will soon own 90% of EMI Music Publishing, following a $2.3bn cash deal with Mubadala Investment Company.
The two parties have inked a legally binding memorandum of understanding (“MOU”) for the sale of a Mubadala-led consortium’s 60% equity interest in EMI Music Publishing to Sony Corporation of America.
The deal values EMI Music Publishing at $4.75 billion.
The closing of the transaction is subject to certain closing conditions, including regulatory approvals.
If the sale goes through, Sony will assume EMI Music Publishing’s existing gross indebtedness, which was approximately $1.359bn as of March 31, 2018.
As a result of the transaction, Sony will indirectly own approximately 90% of the equity in EMI Music Publishing – with the remaining 10% owned by the Jackson Estate – and it will become a consolidated subsidiary of Sony.
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.”
EMI Music Publishing was acquired by an investor group led by Mubadala for $2.2bn in 2012. The deal saw Sony take 30%, the Jackson Estate take 10%, and a Mubadala-led consortium take 60%.
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.”
Sony expects to pay a cash consideration of approximately $2.3 billion to seal the deal.
Upon closing of the transaction, Sony expects to record in operating income a non-cash step-up gain of approximately 100 billion yen ($1bn) for the equity interest in EMI Music Publishing it currently owns.
EMI Music Publishing owns or administers over two million songs that include classics by Queen, Carole King and the Motown catalog along with contemporary songs from Kanye West, Alicia Keys, Drake, Sam Smith, Pink, Pharrell Williams, Calvin Harris, Fetty Wap, Hozier and Sia.
Together with Sony’s 100%-owned music publishing company, Sony/ATV, and Sony’s 100%-owned music company, and Sony Music Entertainment (Japan) Inc., the Sony Group collectively owns more than 2.3 million copyrights, featuring the Beatles, contemporary superstars and the Leiber Stoller catalog.
EMI Music Publishing generated revenue of $663 million, adjusted operating income of $181 million*, and adjusted EBITDA of $249 million* for the fiscal year ended March 31, 2018.
* Adjusted to exclude certain non-recurring warrant expense and management incentive plan accruals.Music Business Worldwide