Bertelsmann to Buy Back Firm’s Stake

BERLIN —  Bertelsmann, Europe’s biggest media company, said Thursday that it would buy back a Belgian holding company’s 25% stake for 4.5 billion euros ($5.8 billion) -- a move that frees it from the prospect of an initial public offering.

The company also indicated it plans to sell BMG Music Publishing, the world’s third-largest music publisher, to help finance the buyback and said it had received numerous inquiries about it.

Bertelsmann had raised the possibility of buying out Groupe Bruxelles Lambert this week, sidestepping GBL’s plan to sell the shares on the stock market.

The buyback will be financed with a bridge loan from several banks -- a significant part of which will be paid back over the next 12 to 18 months, partly with proceeds from the sale of BMG Music Publishing, Bertelsmann said.

Bertelsmann said it would invite selected bidders to participate in an auction process for BMG Music Publishing in June.

BMG Music Publishing has rights to more than 1 million songs and contracts with artists including Christina Aguilera, R. Kelly, Justin Timberlake, Robbie Williams and Coldplay.

Bertelsmann owns Random House, the world’s largest publishing house, magazine publisher Gruner & Jahr as well as broadcaster RTL. It also operates Sony BMG, a music joint venture with Sony Corp.

Chief Executive Gunter Thielen said Bertelsmann managers and the majority shareholders -- the Mohn family -- “are convinced that the share buyback is the best option to secure the continuity and the successful development of the company on the basis of our corporate culture of partnership.”

German media had speculated that the Mohn family, which controls Bertelsmann directly and through a foundation and exercises close control of its management, wanted to avoid putting its shares on the stock market.

The buyback “guarantees the independence of the company,” family representative Liz Mohn said.

Thielen noted Bertelsmann was on track for record results this year and said, given that and expected progress in the coming years, “the purchase price agreed with GBL is reasonable.”

Thursday’s agreement is subject to approval by the companies’ boards.