A wholly owned subsidiary of Sony, Sony Corporation of America, has reached an agreement to acquire the entire stake currently held by Mubadala Investment, an Abu Dhabi consortium, of EMI Music Publishing for the price of $1.9 billion.
Sony said it is expecting to pay in full approximately $2.3 billion for the majority interest in EMI Music Publishing, which it hopes strengthens its portfolio of entertainment, the company based in Japan said on Tuesday.
That $400 million additional will be paid to EMI Music Publishing existing stakeholders to facilitate the new acquisition, said a Sony representative.
Mubadala’s consortium has an equity interest of 60% in the publisher of music, while Sony has almost all of the remaining 40%. However, the financial investment segment of Mubadala has been managing EMI Music Published since 2012 on behalf of its investors.
If this transaction is successful, Sony will be the indirect owner of 90% of the EMI Music Publishing equity interest, making it a consolidated subsidiary, said Sony in an official statement. However, the final price to purchase the stake is subject to customary adjustments made at closing.
EMI Music Publishing is the owner of or administrators of more than two million songs. The songs include classics by Carole King and Queen, as well as many contemporary songs by Sam Smith, Drake and Kanye West amongst others. Meanwhile Sony owns over 2.3 million copyrights from its wholly owned subsidiaries Sony Music Entertainment and Sony/ATV.
This is an area that has plenty of growth for the long-term, said an analyst on Wall Street. Music publishing, which is the rights to music lyrics, writing, song writing and more, is separate from recorded music, of which Sony has lots of rights already.
The analyst explained that owning the arm of music publishing was hugely important for ownership over the long-term, of music catalogs.
The deal was based upon a $4.75 billion enterprise value, said Sony Tuesday. The company is also going to assume the existing debut of EMI Music Publishing of an estimated $1.36 billion as of March 31, 2018.
The move by Sony to buy EMI Music Publishing is a big initiative take by Kenichiro Yoshida, who in April took over the CEO role for the company.
Analysts say that Sony has decided to move away from the making of commodity products such as personal computers, televisions and mobile handsets, toward areas such as movies, games and music.