Sony goes solo as Sony BMG disbands
FRANKFURT/TOKYO (Reuters) - Sony Corp has agreed to purchase Bertelsmann's 50 percent stake in their Sony BMG music joint venture for around $900 million, ending a four-year venture that never lived up to its promise.
Sony said in a statement on Tuesday that Bertelsmann will also get $300 million of the cash on Sony BMG's balance sheet, valuing the deal at around $1.2 billion.
The music company -- the world's scond-largest after Vivendi unit Universal -- will now be called Sony Music Entertainment Inc (SMEI) and become a wholly owned subsidiary of Sony Corporation of America.
Recording artists at SMEI will include Celine Dion, Alicia Keys, Bruce Springsteen, Justin Timberlake, Usher and Jay Chou.
In August 2004 Germany's Bertelsmann teamed up with Japan's Sony to create the venture, which includes labels such as Arista Records and Zomba.
Sony BMG had sales of 1.5 billion euros ($2.32 billion) in 2007.
A Sony spokesman in Tokyo said the electronics maker expects the transaction to be completed later this year but declined to comment on how the deal would affect Sony's earnings.
The deal has to be approved by regulatory authorities.
Sony added that it saw net cash costs of around $600 million as it did not consolidate Sony BMG's cash.
Bertelsmann Chief Executive Hartmut Ostrowski, who took on the top job in January this year, has been steadily disposing of assets in an effort to focus the media giant on growth.
He has so far sold off large chunks of the company's loss-making book unit and said the sale of Sony BMG was part of that strategy.
"This move is consistent with our new growth strategy and will enable us to focus on our defined growth areas," he said in a statement.
(Reporting by Nicola Leske in Frankfurt and Kiyoshi Takanaka in Tokyo)
