PE trio in $3.3bn Warner Music exit

The record label backed by Bain Capital, Providence Equity Partners and Thomas H. Lee Partners is to be sold to Len Blavatnik’s Access Industries before the end of Q3 2011.

Bain Capital, Providence Equity Partners and Thomas H. Lee Partners have agreed to sell their stakes in Warner Music Group to Access Industries in a deal that values the company at $3.3 billion.

Providence, for one, will score a 2x multiple on the exit, a person with knowledge of the situation told Private Equity International.

The record company, bought by the three firms and Warner chairman Edgar Bronfman in early 2004 for $2.6 billion, sold at a price of $8.25 per share, which represents roughly a 34 percent premium over the average share price of $6.14 over the previous six months. Following the sale, Warner Music will no longer be traded on the New York Stock Exchange. The label has released records by Madonna, Green Day, Red Hot Chili Peppers and Metallica.

Bain, Thomas H. Lee and Bronfman together hold approximately 56 percent of the company, according to a statement. The transaction is expected to close by the end of the third quarter.

Access’ successful bid beat out a joint bid by Gores Group and Platinum Equity, firms run by Alec and Tom Gores, sources told Private Equity International.

Warner Music Group went public in July 2005, offering 32 million shares of common stock at $17 per share. The initial public offering raised about $554 million, well below the anticipated $750 million. Credit Suisse and UBS provided financing to Access Industries, the U.S.-based industrial group led by industrialist Len Blavatnik.

The sale of Warner Music comes as Citi is trying to sell EMI after taking over the company earlier this year from Terra Firma Capital Partners. Media outlets in March reported Citi was shopping EMI to potential buyers, including to private equity firms.