Bertelsmann Buys Out BMG for $390M: Sources

BMG Rights Management Acquires Francis Dreyfus Music

BMG Rights Management Acquires Francis Dreyfus Music

Bertelsmann is now the outright owner of BMG Rights Management.  The German media group has acquired the 51% in BMG that it didn’t already own, paying investment-group Kohlberg Kravis Roberts & Co (KKR) a price-tag estimated at well-over a quarter billion dollars.

Both sides have agreed to keep details on the price secret, though informed sources at Bertelsmann say an amount of €300 million ($390 million) has changed hands.

Following today's announcement of the transaction, BMG is valued at €1.2 billion ($1.56 billion), Bertelsmann sources tell

In recent years, Bertelsmann’s CEO Thomas Rabe has stressed the five-year long partnership with KKR on BMG Rights Management was on good terms. But he had also pointed out that his group was keen to take over all shares of the successful BGM Rights Management.

Until now, Bertelsmann had a 49% stake in BMG. Insiders say an agreement on a sale was reached rather quickly -- just weeks after negotiations kicked off -- because KKR is understood to be planning big investments in other areas.

Read exclusive interview with BMG’s Hartwig Masuch on this deal HERE

The transaction is subject to regulatory approval and is scheduled to close during the first half of this year.

BMG administers the rights to more than one million songs, including works by such artists as Bruno Mars, Duran Duran, Gossip, Johnny Cash, and It also represents the master rights of such artists as Brian Ferry, Nena and Anastacia.

In a statement issued today, Rabe said: “This is a great day for Bertelsmann. We are bringing the music home to our group. A few years after our exit from the traditional music business, in association with KKR, we have succeeded in building the world's fourth largest music rights management business.”

He then went on to praise BMG CEO Hartwig Masuch and his team for developing a “powerhouse” that was finding “the right answers to the challenges of the music industry in this digital age.”

Thomas Hesse, who as president, corporate development and new businesses, at Bertelsmann is responsible for BMG, added in the statement: “The BMG success story is impressive. The company works with a lean organization, a management with an excellent network, and a deep understanding of the needs of artists, songwriters and copyright holders in the digital age. We will operate this business long-term to actively expand it.”

BMG began life as a specialist music publisher, but it made a big play in the independent catalog space when it bought the Sanctuary label from Universal Music in February.

Universal Sells Sanctuary Label to BMG

BMG launched after Bertelsmann had disengaged from the Sony BMG joint venture, which begun in 2004 and ended four years later when Sony acquired the 50% of the company it didn’t already own.