(News Bulletin 247) – An opinion from the AMF led the board of directors of the music publishing group to invite Warner Music Group to submit a binding offer for the company.

An important lock has been broken and the battle can begin. Interested in the takeover of the French online music publishing group Believe, the record company Warner Music Group will indeed be able to take on the consortium which has launched a takeover offer for the company.

Recall that in February the founder of Believe, Denis Ladegaillerie, joined forces with the investment company EQT and funds advised by TCV to launch a public purchase offer (OPA) of 15 euros per Believe share to the following a project to acquire blocks of shares which would allow this consortium to increase to more than 70% of the capital.

The price of this offer was, however, criticized by several market observers, the amount of 15 euros per share being significantly lower than the company’s IPO price in 2021, of 19.5 euros.

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A battle decided by the AMF

Which left the door open to a more generous competing offer. At the end of February, Warner Music Group contacted Believe with a view to a possible merger before indicating, at the beginning of March in a press release, that its approach had been made on the basis of an indicative price of at least 17 euros.

This is where things get complicated. Faced with the competing expression of interest from the American record company, the consortium attempted to lock in its operation by waiving a condition for the success of the repurchase of the blocks of shares: the favorable and unreserved reasoned opinion of the board of directors. Believe administration.

As Believe explained, this renunciation had the repercussion of placing this consortium “in a position of majority control of Believe, independently of the opinion of the board of directors and the report of the independent expert”. “This situation, unless considered legally invalid, would prevent the success of a competing bid for control of the company,” Believe continued.

Warner Music Group contested this decision, arguing that it was contrary to French stock market law, unlike (obviously) the consortium which assured that its renunciation was valid.

Faced with this legal disagreement between the two camps, Believe had contacted the Financial Markets Authority (AMF) for consultation. In the meantime, Warner Music Group could not have access to the key information necessary to carry out the essential checks (due diligence) before a potential takeover offer.

This Monday, Believe announced that the AMF had ruled, in favor of Warner Music Group. The authority considered that the consortium’s renunciation “was not in compliance with the principles governing public purchase offers”.

The price goes up

Consequently, Warner Music Group will have access to a “data room” (secure space for sharing confidential documents) and will hold information on the company equivalent to that of the consortium in order to formulate a formal offer. The board of directors now invites the music major to submit its binding offer before April 7.

Now that this lock has been cleared, speculation on Believe’s takeover offers can be rife. Unless obviously Warner Music Group, after consulting the “data room”, decides not to make an offer.

For now, Believe shares take off this Monday and gain 5.2% to 16.64 euros around 10:30 a.m., thus getting closer to the minimum price mentioned by Warner Music Group.

In a note published last week, the Stifel bank estimated that Warner could increase the buyout price to 20 euros per share, once its audits were carried out. This is to reduce the risk of overbidding on the part of the consortium. She also imagined an alternative scenario in which Sony and Universal Music Group would take part in the battle, which would propel the purchase price to… 40 euros per title.