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Yucaipa Bids $3 Billion for Warner Music

Thursday, 7 Apr 2011 | 5:36 PM ET

As the three-month auction for Warner Music Group draws to a close, Yucaipa Companies is the frontrunner. Its $3 billion plus bid would beat a recent offer of $2.8 billion by BMG , a KKR and Bertelsmann joint venture. Both bids are for the whole company.

Some 70% of Yucaipa’s proposal is comprised by debt totaling around $2.1 billion.

The sale process aligned Yucaipa with several partners, including entrepreneur Sean Parker and investor Doug Teitelbaum, but it remains unclear which names are on the final bid.

Interest also emerged recently from Live Nation , but the person noted it would only be bidding on the recorded music business, which manages the artists. MacAndrews & Forbes, the private equity firm led by Ron Perelman, is also bidding for that half of the business, valuing it around $1 billion.

A shortlist of interested parties, as of Thursday, included the following: Sony Music Group, Tamares, Guggenheim Partners, Platinum Equity, the Gores Group, and Permira.

Some of these may bid for only part of Warner Music , but this strategy has already failed once. CNBC reported in March that a previous partial bid from KKR and Bertelsmann’s joint venture, BMG , had come up short, sending the team back to the drawing board on a full offer.

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