German group plans to buy back GBL shares.

German media group Bertelsmann is planning to sell its 50 percent stake in music company Sony BMG, which it owns together with Japanese electronics group Sony Corp., to avoid a stock market listing, the Financial Times and the Wall Street Journal said.

Both newspapers said on Monday (March 27) Bertelsmann wanted to raise cash to buy out its only outside investor, Groupe Bruxelles Lambert SA -- a Belgian company that owns 25 percent of Bertelsmann and has said it plans to float its stake.

The combined value of Bertelsmann's Sony BMG stake and its BMG Music Publishing operations is about $3.5 billion to $4 billion, the Wall Street Journal report said. Analysts have valued GBL's stake in Bertelsmann at around 5 billion euros ($5.99 billion).

The FT said Bertelsmann has asked investment bankers to prepare the sale of its stake in the world's second-largest music company and its music-publishing catalogues to help finance a buy of all or most of GBL's stake.

But the newspaper said the plans were at an early stage and that while Bertelsmann would have few problems finding a buyer for its BMG music publishing unit, it could prove difficult for the media group to sell its stake in Sony BGM.

Bertelsmann spokesman Andreas Grafemeyer declined to comment on the reports when reached early on Monday, except to say, "That's speculation." A Sony spokesman also declined comment.

Sony has the right to take full control of the music joint venture, but if it decides not to do so, Bertelsmann would have to find a buyer willing to be in a partnership with the Japanese group or persuade Sony to also sell its stake, the FT said.

Bertelsmann has hired Boston Consulting Group to take a fresh look at the media group and to help decide whether it should keep all of its six business lines, which also include book publishing and TV, or perhaps extend to new ones.

Last week, Bertelsmann Chief Executive Gunter Thielen played down the relationship between the consulting firm's findings, expected later this year, and GBL's plans to float its Bertelsmann stake -- despite earlier reports that the world's fourth-largest media company was looking at ways to raise cash to buy GBL's holding.

(c) Reuters 2006