Warner Music Group launches IPO, sets price at $25 a share

Warner Music Group on Wednesday began selling its stock at $25 a share, marking the largest initial public offering in the U.S. this year.

The New York-based company, which represents artists such as Ed Sheeran and Cardi B, increased the number of shares in its offering to 77 million shares, 7 million more than previously announced.

Shares trading under the symbol “WMG” rose 18% to $29.46 on Nasdaq on Wednesday afternoon.

The IPO signals a rebound in the music business, which has evolved to embrace the streaming revolution brought on by companies such as Spotify.

The IPO comes amid an uncertain time for the music industry, which has been hard hit by the COVID-19 pandemic, with many live events canceled or postponed. Music businesses such as concert promoter Live Nation have taken a major hit as concerts and festivals have been scrapped due to the pandemic.

Nonetheless, some people in the industry believe that the suspension of those events is temporary and the crowds will come back when safety protocols are put into place. Streaming businesses have also weathered the fallout much better than others in the entertainment industry.

The IPO is expected to be a windfall for billionaire Len Blavatnik, who bought Warner Music Group for $3.3 billion in 2011. Today, it is the third-largest music company by market share.

Warner Music Group has enjoyed steady sales growth in recent years. In its fiscal year that ended Sept. 30, 2019, the company saw sales jump 12% to $4.5 billion, according to a regulatory filing. The company posted net income of $258 million that fiscal year.

The company said it will not receive funding from the IPO. Shares sold will benefit Access Industries, a group Blavatnik founded, and related stockholders, Warner Music Group said. It declined to comment on what Access Industries plans to do with the money.

Blavatnik and Access is expected to recover his initial investment of $3.3 billion and some, but will also retain control of the company.

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