The Deal: Is Imagem Too Big to Sell?

The industry has doubts that the music publisher can fetch $650 million

Now that one of the world's largest independent music publishers, Imagem, is seeking a buyer, financial and publishing sources say they're skeptical the Netherlands-based firm - which owns and administers publishing rights for some of the biggest names in pop, classical and musical theater - will find a buyer to go for its $650 million asking price. Billboard broke the news April 28 that New York-based investment bank Jeffries is shopping the publishing giant, which counts works by Daft Punk, Justin Timberlake and Vampire Weekend; classical composers Igor Stravinsky and Aaron Copland; and theater greats Rodgers & Hammerstein among its catalogs.

Imagem was founded in 2007 by Dutch pension fund ABP and music publishing firm CP Masters. In an email, Imagem CEO Andre de Raaff explained that ABP has invested in Imagem for more than six years and now finds the "time right to look at this investment and to investigate the best options for the future."

Sources say ABP has invested approximately $650 million in publishing acquisitions for Imagem, and is looking to recoup at least as much. It's believed the pension fund already extracted dividends from the company during its ownership. In 2009, Imagem paid approximately $225 million to acquire music publisher Rodgers & Hammerstein, which owns the famed Broadway composers' catalog, including the musicals Oklahoma! and South Pacific, for $240 million. In 2008, it paid $240 million for classical music publisher Boosey & Hawkes. And in 2008, Imagem ponied up $150 million for Rondor, Zomba U.K., BBC Catalogue, 19 Music and 19 Songs.

Imagem's $650 million price tag would appear to be in line with the typical valuation method for music publishing houses: 10 times net publisher's share - industry speak for gross profit. Imagem's 2013 NPS was about $65 million, sources say. But skeptics contend the company will have a tough time getting that amount in today's marketplace.

Others say the publishing giant may have to be broken up because its size makes it difficult for the largest U.S. publishers - Sony/ATV, its EMI Music Publishing joint venture or Universal Music Publishing Group - to get clearance from European Union regulators.

That leaves Warner Music Group, BMG Rights Management and possibly Canadian publisher Ole and Atlas Music Group as the only strategic suitors capable of making such a large acquisition.

In his email, de Raaff noted that Imagem is considering "a sale, a strategic partnership" or, if the price isn't right, "a hold" on the deal.