Sony to buy Bertelsmann’s Sony BMG stake

Bertelsmann will sell its 50-percent stake in Sony BMG to Sony Corp. in a $900 million deal, the companies announced today, giving the Japanese company full ownership of the joint venture whose roster of artists include Alicia Keys and Leona Lewis.

A statement released by the privately held Bertelsmann said the new company will be called Sony Music Entertainment Inc. and become a wholly owned subsidiary of Sony Corp. of America. The joint venture was created in August 2004.

In a filing with the U.S. Securities and Exchange Commission, Sony said it would pay Bertelsmann $600 million for its stake and give Bertelsmann all of the $600 million in cash holdings of the joint venture.

Since Bertlesmann already owned $300 million of that sum, the deal is valued at $900 million.

A person familiar with the deal speaking on condition of anonymity because he was not allowed to talk to the press, said the deal, including tax advantages, was worth $1.5 billion to Bertelsmann.

In contrast, Sony would pay only $600 million for the company since it had never accounted for the cash in the joint venture.

Sony’s shares rose $1.15, or 3.1 percent, to $38.17 in midday trading.

Bertelsmann will also take over a limited amount of selected European music catalog assets from Sony BMG, which represents about $20 million, or less than 1 percent of Sony BMG’s revenue last year.

Bertelsmann Chief Executive Hartmut Ostrowski said the decision was made to sell the 50-percent stake after a careful but thorough review. He called it consistent with the German company’s new growth strategy.

“This move is consistent with our new growth strategy and will enable us to focus on our defined growth areas,” he said. “Sony has been an excellent partner, and they are the right company to take this business to the next step and ensure that it realizes its full value and potential.”

Once the deal, which is subject to regulatory approvals, is complete, Sony Music Entertainment Inc. will be comprised of several music labels, including Arista Records, Columbia Records, Epic Records, J Records, Jive Records, RCA Records and Zomba.

Its artists will include Celine Dion, Bruce Springsteen, Justin Timberlake and Usher, among others.

The deal is not subject to approval by Sony shareholders and is expected to close before the end of the year.