Warner Music Group and Denis Ladegaillerie’s tussle over shopping for Imagine is hotting up – as France’s SEC equal will get dragged into the drama.

Proper. Earlier than we inform you the newest within the fast-unfurling cleaning soap opera of Imagine, Warner Music Group, and Denis Ladegaillerie‘s consortium, it’s in all probability useful to convey you on top of things.

Imagine you me, MBW would love to only skip to the newest chapter: Imagine’s board* calling within the AMF – France’s equal of the USA’s Securities and Change Fee (SEC) – to rule on whether or not one essential transfer by Denis Ladegaillerie’s consortium will get the AOK, or the A-Oh-Nay.

However with out the requisite context, belief us, this story will in all probability go away you misplaced at sea.

So earlier than we get to the good things, right here’s a fast chronological recap on what’s occurred thus far, based mostly on a flurry of bulletins issued by Imagine and its board (and one by WMG) in latest weeks:

• On February 12, a consortium comprised of two funding firms – TCV and EQT – plus Denis Ladegaillerie, the founder and CEO of Paris-headquartered Imagine, introduced that that they had tabled a EUR €15-per-share bid to accumulate Imagine and take it personal. This bid valued Imagine at round USD $1.6 billion;
• The Ladegaillerie consortium famous that it had already reached personal agreements to accumulate 71.92% of Imagine through ‘Block Acquisitions’. These ‘Block Acquisition’ agreements had been privately inked with 4 present homeowners of Imagine inventory: Ventch and Xange, plus TCV and Denis Ladegaillerie. (To reiterate: The Ladegaillerie/TCV/EQT consortium has agreed to accumulate shares from Ladegaillerie himself, plus TCV itself, plus two different stockholders.). The consortium’s acquisition of this 71.92%, mentioned Imagine, could be topic to 2 circumstances: (i) Regulatory approval in France; and (ii) the issuance to Imagine shareholders of the board’s approval of Ladegaillerie’s bid, aka a “equity opinion” knowledgeable by a report from impartial specialists. Subsequent to those hurdles being cleared – and the 71.92% formally touchdown within the consortium’s bag – the consortium mentioned it could make a proper €15-per-share provide to the rest of Imagine’s shareholder base;
• On February 21, Warner Music Group contacted Imagine’s board* “to provoke discussions [regarding] a possible mixture of Imagine with WMG”.
• On February 27, WMG advised Imagine’s board* that it is perhaps prepared to worth Imagine at “a minimum of” EUR €17-per-share based mostly on presently obtainable public info. Nonetheless, WMG mentioned it could solely make a proper provide after receiving and reviewing what Imagine deems “confidential info” relating to its funds. WMG made a proper request for this “confidential info”.
• A €17-per-share provide could be round 13% increased than the Ladegaillerie consortium’s provide, and would worth Imagine at over USD $1.8 billion. Warner advised Imagine’s board that, if WMG does go forward with a proper provide for Imagine, it could have the ability to pay the entire quantity in money;
• On February 28, in what seems to be a response to the Warner method, the Ladegaillerie consortium advised Imagine’s board that it could now be “waiving” one of many previously-announced circumstances for its 71.92% ‘Block Acquisitions’ – the one requiring the Imagine board to difficulty an approval of the bid to shareholders (aka the “equity opinion”), knowledgeable by impartial specialists. Because of this “waiver”, Imagine would later affirm, the ‘Block Acquisitions’ would face just one situation: regulatory approval in France (referring to anti-trust clearances), which Ladegaillerie’s consortium mentioned it “expects to acquire in a brief timeframe”;
• On March 7, Warner Music Group publicly unmasked itself as being considering contemplating a takeover bid for Imagine. As a part of this announcement, WMG expressed its sturdy disapproval of the Ladegaillerie consortium’s intention to “waive” the “equity opinion” situation of its ‘Block Acquisitions’ bid. Warner mentioned: “WMG considers that such a waiver violates a variety of guidelines of French securities laws which are supposed to defend shareholders (together with the sellers and their buyers) and the Firm, and that the validity of such waiver could possibly be challenged.”
• Ladegaillerie’s consortium publicly bit again at that declare by Warner on Friday (March 8), claiming in a press launch that, in its view, its determination to “waive” the situation in query was legitimate and complied with French laws;
• Final actually apparent factor: If Ladegaillerie’s consortium efficiently acquires 71.92% of Imagine, it will likely be the bulk proprietor of the corporate. You’d anticipate this to finish any curiosity that Warner has in buying Imagine – even when any of the minority shareholders exterior of the 71.92% would have moderately offered to WMG.

Okay, you’re just about on top of things! Now for the newest.

Immediately (March 11), Imagine’s board* has introduced three necessary issues:

1. It’s contacted the monetary authority of France, the AMF, to ask whether or not Ladegaillerie’s consortium was, legally talking, allowed to “waive” the board-approval/”equity opinion” situation. The AMF (Autorité des marchés financiers), as talked about above, is France’s equal of the SEC in america. Imagine’s board notably needs to know if the “ideas of tender provides” apply right here – i.e. if a preliminary method from a possible rival bidder signifies that the Imagine board’s approval of Ladegaillerie’s bid (“equity opinion”) is in reality required earlier than the ‘Block Acquisitions’ can go forward;
2. Whereas it awaits the AMF’s opinion, Imagine’s board* has advised Warner that it’s going to not be handing over the “confidential info” requested by WMG relating to Imagine’s funds. (You’ll be able to see why that is: If Imagine’s board* arms over this confidential info, then Warner subsequently can not oust the Ladegaillerie consortium’s takeover, Imagine could have simply let considered one of its key international rivals ‘beneath the hood’ of its funds for zero tangible achieve.);
3. Imagine’s board* claims that, when it acquired the “binding proposal” from the Ladegaillerie consortium, the consortium “didn’t point out that [either of the two agreed] circumstances [for the deal] could possibly be waived”.

(* Technically talking ‘Imagine’s board’ as described all through this text is in reality what’s known as an ‘Advert-hoc Committee’, i.e. an unique group of these board Administrators at Imagine who aren’t personally entangled in Ladegaillerie and co’s bid. However we thought readers who’d made it this far down would have parsed fairly sufficient info already – so we determined to solely point out this caveat after immediately’s information was safely snuggled into your mind’s frontal cortex.)

Clearly, if the AMF provides the Ladegaillerie “waiver” the thumbs-up, this story seems to be over.

But when it doesn’t – and cites the “ideas of tender provides” in France in doing so?

This drama could have some time to go simply but.

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