Warner Music Group leaves the ball before even entering the dance floor. To everyone’s surprise, the American major announced, Saturday April 6, “have, after careful consideration, decided not to submit a firm offer” to buy back Believe. The board of directors of the digital music company had given Warner until Sunday, April 7 at midnight to formulate a buyout offer.
This decision leaves the field open to the consortium bringing together Denis Ladegaillerie, the CEO and founder of Believe, and the investment funds TCV and EQT euros per share, or nearly 1.5 billion euros. The Stock Exchange, however, believed in a bidding war: the stock closed on Friday April 5 at 16.50 euros, close to the 17 euros mentioned by Warner for a possible public takeover offer (OPA).
On February 21, the American label, owned by Anglo-American businessman Len Blavatnik, wrote to the board of directors of Believe to express its interest. A “data room” had been opened over the last fortnight to allow the claimant to analyze internal documents and information. Obviously, this work was not conclusive: according to our information, in a letter addressed to the ad hoc committee bringing together the three independent directors of Believe responsible for supervising the sales process, Warner justifies its withdrawal in particular because of “certain risks” identified.
Not everything is settled yet. First of all, there is the question of the release of Believe from the rating. The takeover consortium, in fact, warned that it aimed to buy back the entire capital of the company, which had displeased the minority shareholders who entered during the IPO in 2021. The operation , carried out at a price of 19.50 euros per share, would prove to be a big loss for these investors if they had to sell at 15 euros. A shame as the company is doing well.
Major test
The manager Sycomore AM thus called on his peers to mobilize against a compulsory withdrawal, made possible when the buyer owns 90% of a listed company. In recent days, according to a person familiar with the matter, the buyout consortium seemed ready to give up on delisting Believe. To see if Warner’s abandonment encourages him to maintain his initial intention.
While there are not many managers ready to participate in IPOs, this affair represents a major test for the Paris financial center. Investment bankers do not hide, in fact, that they are studying numerous projects to extract undervalued companies from the Parisian stock market. Believe’s disappointing stock market performance is far from being an isolated case on the Parisian market, particularly in tech. The European cloud leader, OVHcloud, trades at less than 11 euros, compared to the 18.50 euros required during its IPO in October 2021. As for the streaming platform Deezer, it is worth 2 euros per share , compared to 8.50 euros for its first steps on the stock market in July 2022.
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