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Bertelsmann Acquires Full Ownership Of Music Company BMG
Bertelsmann Chairman & CEO Thomas 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." Rabe emphasized that KKR has been a good partner. "Our partnership made it possible for BMG to take advantage of consolidation opportunities and to rapidly advance the organic expansion of the business. I thank them for an excellent collaboration." Taking full ownership of BMG is an important step in putting Bertelsmann's growth strategy into practice, Rabe explained. "We are happy to have BMG as our own company again. CEO Hartwig Masuch and his team deserve our thanks for the passion and know how they brought to developing a small creative nucleus into a powerhouse that provides the right answers to the challenges of the music industry in this digital age." Johannes Huth, Head of KKR Europe, said: "Our innovative partnership with Bertelsmann, which combined the professional expertise of a global media company with the financial strength, network and business-building expertise of KKR, was a complete success. We explored new business approaches with Bertelsmann; BMG did pioneering work in the music rights market with its digital, service-focused business approach. The model of a 'growth and build' partnership between a corporate group and KKR is bound to be seen more often in the future." Thomas Hesse, who as President, Corporate Development and New Businesses, at Bertelsmann is responsible for BMG, added: "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." Hartwig Masuch, CEO of BMG, said: "For BMG, this is a return home. Being a subsidiary of one of the world's leading media companies opens up more fields of cooperation for us and our customers in the future, and we look forward to many new, long-term development opportunities. The worldwide increase in the use of music, and the emergence of new digital business models offer a variety of opportunities that we will actively explore. We are grateful to KKR for always sharing our vision of an alternative, service-oriented company in the music rights market, and for actively supporting us with their team these past three and a half years. Without KKR, this development would not have been possible." Philipp Freise, Head of KKR's European media business, added, "BMG has delivered an outstanding performance since it was founded, and has exceeded our original expectations. Together with Bertelsmann, we systematically supported BMG's international expansion. As we had hoped, today, BMG is one of the world's leading music rights management companies and very well positioned to continue writing its success story under the proven leadership of Bertelsmann." BMG, with headquarters in Berlin and a presence in eight core countries, is highly profitable on an operating result level. Numerous renowned artists are signed to the company, which in recent years has acquired several rights catalogs and labels from the United States, UK, Germany and France. BMG will be fully consolidated within Bertelsmann after antitrust clearance has been received. Hartwig Masuch will remain CEO. J.P. Morgan served as Bertelsmann's financial advisor in the share buyback, while KKR was advised by Citigroup.
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