Warner Music Group Corp. (WMG) passed on a higher offer from a group that included Sony Corp. (6758) when it accepted the $8.25-a-share buyout bid from Len Blavatnik, people with knowledge of the music company’s auction said.
Sony, with Guggenheim Partners and Ron Perelman, was willing to pay $8.50 a share for Warner Music, or 3 percent more than the $1.3 billion offered by Blavatnik’s Access Industries, according to the people, who declined to be identified because the deliberations were private.
Sony’s offer was contingent on the approval of its partners and board, one of the people said. In a regulatory filing today, Warner Music detailed the process that led to the May 6 agreement with Blavatnik. Bidders are given letter names, with the group offering $8.50 identified as Bidder B Consortium.
Warner will be required to pay Blavatnik’s Access Industries $56 million if the agreement is terminated under certain conditions. Blavatnik could be required to pay a reverse termination fee of as much as $140 million if the deal founders because of a willful breach on his part.
Warner Music, based in New York, was sued on May 12 in Delaware Chancery Court in Wilmington by a shareholder who claims the Blavatnik bid undervalues the company.
Liz Young, a spokeswoman for Sony Music, declined to comment, as did Amanda Collins at Warner Music.
Warner Music, controlled by private-equity companies, fell 2 cents to $8.19 at 4:15 p.m. p.m. in New York Stock Exchange composite trading. The shares have climbed 46 percent this year.
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