Sony Corp has held preliminary talks to acquire a majority stake in EMI Music Publishing Ltd, people with knowledge of the matter said, as its Abu Dhabi-based owner seeks to cash in on the booming market for streamed music.
Mubadala Investment Co has begun reaching out to potential suitors for the catalogue of more than 2.1 million songs, which includes hits from Beyonce and Carole King, said the people, who asked not to be identified discussing private information.
The Abu Dhabi sovereign wealth fund has held talks with Sony and approached other possible buyers, including entertainment groups and potential financial bidders, the people said.
Adding EMI’s extensive catalog would solidify Sony’s position as the largest music publisher, as paid streaming services proliferate and valuations for music copyrights soar.
Tokyo-based Sony already owns almost 40 percent of EMI, and operates the business.
Mubadala has signaled its intent to sell its majority holding and plans to exercise an option that would force Sony to acquire its stake or trigger a sale of the entire company, the people said.
While that process cannot formally begin until the end of June, Mubadala is already reaching out to interested parties to gauge pricing, they added.
Mubadala is seeking a valuation of at least US$4 billion for EMI, the people said, almost double what the Sony-led group, which also includes billionaire David Geffen, paid for the business six years ago.
A sale would be the largest music industry transaction since the last time EMI changed hands.
If the parties fail to reach an agreement, Sony risks losing the catalogue to one of its largest competitors.
Billionaire Len Blavatnik, the owner of Warner Music Group Corp, has expressed interest in EMI, two of the people said.
Sony and Mubadala declined to comment on the talks.
Growing paid streaming services from Spotify Ltd and Apple Inc have boosted music industry sales for three years in a row and enticed investors to splurge on catalogues. Labels own the recordings of songs, while publishers own the songs as originally written.
Swedish company Kobalt Music Group Ltd last year raised US$600 million to spend on copyrights and acquired Songs Music Publishing, the home of Lorde and the Weeknd.
Concord Bicycle Music agreed to purchase Imagem Music Group, owner of about 250,000 copyrights, including Justin Timberlake and Phil Collins, for several hundred million dollars.
EMI is far larger than any of those companies and was one of the four major music groups, alongside Universal Music Group, Warner and Sony, until it was broken up and sold in 2011.
Universal, the largest record label consortium, acquired EMI’s recording business while Sony, the largest publishing business, bought those assets.
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