Bertelsmann to Sell BMG Music for $2.1 B

Elena
06 Sep, 2006
New York City

Bertelsmann''s chief financial Thomas Rabe said the sale of the unit will help pay back the $5.76 billion of debt raised to finance the buyback of the 25% stake in the company held by Groupe Bruxelles Lambert. Bertelsmann expects that the sale will increase net income by approximately $1.28 billion.

[R]8:00AM Bertelsmann AG agreed to sell BMG Music to Vivendi.[/R]
Bertelsmann AG, German media conglomerate, agreed to sell its music publishing arm to Vivendi SA for $2.1 billion, with part of the price paid for keeping itself a privately held company. Bertelsmann said the transaction was approved by the supervisory boards of both companies. France''s Vivendi said that the acquisition had been approved by its management board and the supervisory board but was awaiting regulatory approval from various countries'' competition authorities.

Bertelsmann expects to receive the funds before the end of 2006. Bertelsmann''s chief financial Thomas Rabe said the sale of the unit will help pay back the $5.76 billion of debt raised to finance the buyback of the 25% stake in the company held by Groupe Bruxelles Lambert. BMG Music Publishing generated $475 million of revenue and $104 million of earnings before interest, taxes and depreciation and amortization for fiscal 2005. Bertelsmann expects that the sale will increase net income by approximately $1.28 billion.

BMG Music Publishing, which owns the rights to more than 1 million songs by world famous recording artists, is expected to be absorbed by Universal Music Publishing Group, making it the largest music publisher by catalog size.


[R]7:30AM Japan falls on profit-taking, HK down on HSBC fears.[/R]
Asian markets were broadly lower on Wednesday. The Nikkei 225 Average in Japan slipped 0.6% to 16284.09. Profit-taking pushed stocks lower, with Internet firms Yahoo Japan and Softbank and paper makers such as Oji Paper leading the decliners. Yahoo Japan and Softbank were under pressure after brokerage firm Credit Suisse assigned its lowest underperform investment rating to the companies. Yahoo Japan fell 3.9% and Softbank tumbled 5.6%, while Oji ended 3.2% lower.

Hong Kong Hang Seng Index shed 1.03% to close at 17258.51. Shares declined on blue-chip HSBC, on worries that index funds will sell the bank before changes in the Hang Seng Index Monday. China Mobile sank 1.9% as traders judged a rally which took the blue chip to a five-year high Monday may have been overdone. Hutchison Whampoa lost 0.7% on concerns about extended losses at its third generation cell-phone networks in Europe.

South Korea Kospi Index declined 0.31% to 1357.01. Tech stocks led shares lower as program selling was sparked off after four straight days of increases. Australia S&P/ASX 200 fell 0.71% to 5113.80. Astonishingly weak GDP data and negative technical factors caused a bearish reversal in the stock market. In Taipei the market ended 0.69% lower at 6688.40. Stocks finished lower, as political uncertainty led to profit-taking. Shanghai Composite Index was the only major index to close in the green, edging up 0.5% to end at 1672.12.


[R]6:30AM European shares declined slightly Wednesday on weaker autos.[/R]
European markets were lower by mid-morning on Wednesday. The U.K. FTSE 100 index shed 0.2% at 5,972, the German DAX Xetra 30 index lost 0.2% at 5,874, the French CAC-40 index declined 0.1% at 5,167. Peugeot led the decliners, shedding 1.2%, and DaimlerChrysler lost 0.5%, after Lehman Brothers downgraded both companies to equal-weight and cut the broader European car sector to neutral.

Dutch chip equipment maker ASML jumped 2.7% following its statement that it expects third-quarter unit orders to be substantially higher than previously indicated. IT consulting company Atos Origin advanced 2.2%, after it reported that its preparing for profit and growth to rebound in 2007, after it posted a lower first-half profit. Hotels owner Accor advanced 0.8% as its first-half net profit climbed a stronger-than-forecast 54%.

U.S. light crude oil declined 52 cents to $68.08 a barrel, having fallen as far as $67.77 a barrel earlier this week, its lowest since May 22. Gold traded at $637.0 an ounce on Wednesday, up $8.10 an ounce from Tuesday''s close of $628.90.

The euro advanced slightly against the U.S. dollar on Wednesday after falling the day before. In early European trading, the euro bought $1.2815, up slightly from $1.2812 the night before in New York. The dollar gained to purchase 116.23 Japanese yen, up from 115.93 the day before, while the British pound fell slightly to $1.8940 from $1.8943 in New York.