German media giant Bertelsmann AG is preparing to buy the 25.1% stake held by Belgian minority shareholder Groupe Bruxelles Lambert for up to €4 billion ($5.1 billion), according to reports.

German media giant Bertelsmann AG is preparing to buy the 25.1% stake held by Belgian minority shareholder Groupe Bruxelles Lambert for up to €4 billion ($5.1 billion), according to reports.

The deal is understood to have been instigated by Bertelsmann's majority shareholder, the Mohn family, over concerns that GBL would demand an initial public offering of that stake. GBL head Albert Frere was expected to announce his plan to take his stake public at Bertelsmann's annual shareholder meeting on Monday (May 22).

However, Bertelsmann will have to conduct some restructuring to be in a position to make a cash offer, perhaps through asset sales and bank loans. To repay the debt quickly, the report in Financial Times Deutschland says, the management board has already considered selling parts of the group, including its 50% stake in Sony BMG Music Entertainment and its wholly-owned unit BMG Music Publishing.

Sony BMG represents such artists as Usher, Shakira and Beyonce. BMG Music Publishing holds rights to songs from artists including Christina Aguilera, Nelly and Coldplay. Together, the music operations earned revenue of €2.13 billion ($2.55 billion) for Bertelsmann in 2005, a year-to-year drop of 16.5%.

If the music interests are sold, they are likely to be snapped up by one of the other majors. Sony would have the first right to take full control of the Sony BMG Music Entertainment joint venture, although it is not expected to exercise the option as it is concentrating resources on its electronics arm.

Bertelsmann is the world's fourth-largest media company by revenue. GBL -- Bertelsmann's sole outside shareholder -- swapped a stake in TV company RTL for one-quarter of Bertelsmann in 2001. RTL now generates more profit than the combined earnings of the company's four other units: Random House, BMG Music, the Gruner & Jahr magazine groups, and book clubs.

Goldman Sachs has valued Bertelsmann at €18.7 billion ($23.6 billion). The Mohns reportedly put the total value of the company at closer to €12 million ($15.1 million).

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