Warner Music to test the stock market with US$1.82bn Nasdaq IPO

It is set to be the largest IPO of the year to date and appetite will be keenly eyed as capital markets are tested in the wake of COVID-19 lockdown.

Warner Music to test the stock market with US$1.82bn Nasdaq IPO
Cardi B performing in Miami back in February – image credit: YES Market Media / Shutterstock

Warner Music Group has confirmed it is rebooting its US$1.82bn cash-out stock market float in New York.

Ed Sheeran’s record label, majority owned by Len Blavatnik’s Access Industries, is planning to sell some 70mln existing shares to public holders.

No new equity is being sold in the Nasdaq IPO.

A regulatory filing confirms that the sale of ‘A shares’ will be priced between US$23 to US$26 per share which, at the top end, will value the label at US$13.26bn.

It will deliver in the order of US$1.6bn to US$1.8bn of proceeds to Access which will still have almost all control of the company, because it will hold 99.1% of the voting shares.

The new valuation marks a substantial investment gain for Ukraine-born billionaire Blavatnik who evidently bought the music industry titan close to the bottom of the market – snapping it up at a US$3.3bn in 2011 as digital piracy challenged music sales, which at that time was still the core revenue-generating part of the music business.

Streaming platforms like Spotify, which pay royalties back to labels, concert ticketing and ‘360 deals’ (which open up a broader range of an artist’s revenue stream to the record label) have all been factors in the recovery of the industry.

As Warner Music tests the market this next week, with its pricing slated for 3 June, it will be keenly eyed by stock market commentators and entertainment media respectively.

The IPO had originally been planned for March before the coronavirus (COVID-19) pandemic forced Warner to put its plans on hold.

Of course, the crisis not only disrupted the IPO but has also led to the cancellation or delay of concerts and tours across the music industry – and notedly, many commentators expect large arena events with thousands of attendees will likely be among the last public gathering to come back.

Warner Music counts Ed Sheeran, Cardi B, Coldplay, Madonna, The Rolling Stones and Led Zeppelin among its portfolio of artists.

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