Warner Music delays IPO pricing on US protest fallout

Warner Music delayed pricing for its public offering on Tuesday, a listing that was set to be the year’s largest US flotation, in observation of an industry-wide shutdown to honour the Black Lives Matter movement. 

The third-largest global music label had planned to price its shares on Tuesday night ahead of a listing on Nasdaq on Wednesday, in a deal that was set to value the company between $11.7bn and $13.3bn. Warner Music was expected to price the shares between $25 and $26 apiece, the high end of a range it had marketed to investors, said people briefed on the matter.

But the listing, which had already been delayed because of the coronavirus pandemic, coincided with a day during which the music industry vowed to step away from their normal business in solidarity with the black community and protests against racism. Spotify, Apple, Live Nation, YouTube and others said they would pause operations on Tuesday in the wake of widescale unrest over the death of George Floyd.

The awkward timing left Warner Music executives fearful about the optics of its owner raising billions of dollars at the same moment they had pledged to look into the inequality in their industry, said people familiar with the situation. 

While the company notified its bankers to postpone the pricing of the listing until Wednesday morning, the dozens of companies tasked with placing the 70m shares — including the likes of Morgan Stanley and Credit Suisse — continued to complete the final tasks before a company lists publicly. Bankers, readying for the first day of trading in Warner Music, continued their work on Tuesday, tallying demand from the institutional investors that can make or break a flotation. The company now plans to price its shares on Wednesday morning.

Prominent Warner Music artists such as Cardi B, Kodak Black and Meek Mill on Tuesday posted blank black boxes on Instagram for #blackoutTuesday. Meanwhile, the big banks, buoyed by a market turnround in recent weeks, were gearing up for the biggest IPO since the coronavirus crisis hit US shores — highlighting the stark divergence between Wall Street and main street. 

The deal could reap up to $2bn for Ukrainian-born billionaire Len Blavatnik, thanks to the growth of streaming and success of hip hop artists such as Cardi B, who have boosted Warner Music’s digital revenues. Mr Blavatnik bought Warner Music for $3.3bn in 2011.

Access Industries, Mr Blavatnik’s holding company, will pocket the proceeds of the listing — not Warner Music. 

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