The European Commission today approved the acquisition of Parlophone Label Group by Warner Music Group, WMG announced. In February, it purchased PLG from Universal Music Group for £487 million (around $765 million) in an all-cash transaction. After the deal was approved, PLG CEO David Kassler announced that he is stepping down from his post.
In a statement, Kassler said:
“I welcome the European Commission’s approval of the acquisition of Parlophone Label Group by Warner Music, it marks a significant milestone for both businesses and the music industry overall. The combined position of WMG and PLG in the market will provide a strong competitor to the other majors and the creative successes of PLG, which continue to flourish – Gabrielle Aplin is on course for a high debut chart position in the UK and Pablo Alboran at No. 1 in the Spanish album chart – demonstrates the strength of talent that WMG is acquiring.”
“As this acquisition nears completion, I have made the difficult decision to step down from my role as CEO. My time at EMI and PLG has been immensely rewarding and I have enjoyed the challenge of steering EMI Music and Parlophone Label Group through different ownerships, numerous creative achievements and two acquisition deals over the last 12 months. It feels like the time is right to pursue new challenges in my career but I will continue to lead PLG through to completion before handing over to Steve Cooper and the Warner Music team.”
A rep for WMG said the company plans planning to close in a few weeks. The label group is comprised of the Parlophone, Chrysalis and Ensign labels as well as EMI’s recorded music divisions in Belgium, Czech Republic, Denmark, France, Norway, Portugal, Spain, Slovakia and Sweden. Its roster includes such acts as Coldplay, David Guetta, Gorillaz, Itzhak Perlman, Pink Floyd and Tinie Tempah.
According to an SEC filing last month, Warner amended its senior secured revolving credit agreement dated November 1, 2012 and is seeking an $820 million term loan in order to finance the Parlophone acquisition, pay related fees and expenses and use for general corporate purposes. The company intends to use $175 million to redeem two senior secured notes and repay approximately $100 million in borrowings under its senior secured term loan facility.
Last month, WMG CEO Stephen Cooper outlined four items for Parlophone’s future:
First, Warner intends for Parlophone to be a frontline label alongside Atlantic and Warner Bros.
Second, Parlophone allows Warner to “reinvigorate” its approach to classical music with a new brand for the genre.
Third, the deal brings a stronger Continental European roster that Warner will use to build its local repertoire.
Fourth, the acquisition of Parlophone’s catalog will serve as a catalyst for a new global catalog strategy.
Warner estimates the combination of the two companies will result in annual cost savings of $70 million. Savings will come from “a wide variety of areas” that covers non-employee factors such as systems logistics and office buildings as well as “integration of support and shared service functions in those territories where duplication will exist,” according to the memo. Some layoffs are expected as a result. [Billboard.biz]
