Shares in digital music company Believe (BLV) fell 9.45% on Monday to €14.94 after Warner Music Group (WMG) announced on Saturday that it would not submit a non-binding offer for the company. became.
Following this news, Bernstein analysts lowered Believe's rating from “outperform” to “market perform,” while restating their price target on the stock at 19.10 euros.
Warner Music Group said in February that it was considering an offer to buy the company for more than $17 a share. At the time, a consortium including Believe CEO Denis Radegairelli, EQT and other shareholders had already submitted an offer to buy the company for 15 euros per share.
Following WMG's latest announcement late last week that it would not make a takeover offer, Believe said it had “considered the situation with all stakeholders (including the consortium) regarding the potential evolution of control of the company. We will decide on next steps.”
Analysts said Warner Music Group's interest in Believe made sense given the company's size, growth profile and strategic fit.
“Therefore, at this stage, WMG's withdrawal is based on the fact that it did not have the support of its key CEO, Mr. D. Radegailely, and that existing shareholders who support the CEO rejected the proposal, thereby preventing WMG from reaching the required level. We speculate that this is likely due to concerns that the company will not be able to reach its 2019 growth rate,” Bernstein analysts said in a note to clients.
Analysts noted that while the latest developments open up a range of possibilities for the consortium, any offer is unlikely to exceed the company's target price of 19.10 euros as there are no alternative bidders.
