Billie Joe Armstrong of Warner Music act Green Day (WireImage)
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With the auction for Warner Music Group entering its final round, it is shaping up to be a two-way contest.
While other prospective buyers have submitted bids for parts or all of the company, insiders said the real competition for the No. 3 music company is between the billionaire Gores brothers and Russian-born businessman Len Blavatnik’s Access Industries.
Tom Gores’ Platinum Equity is spearheading the bid along with Alec Gores’ investment firm, the Gores Group. The brothers submitted a bid valued at $7.50 a share, or around $3 billion, said an executive close to the process. Warner shares closed yesterday at $7.40, down about 1 percent.
The two brothers are said to be interested in Warner Music to bolster a third brother, Sam Gores, who controls the Paradigm Talent Agency. Paradigm’s music department reps the likes of Aerosmith and the Black Eyed Peas. The Gores didn’t return calls for comment.
The brothers have looked at a number of music and entertainment assets, including movie studio Miramax. Gores Group has also submitted a bid for “American Idol” owner CKX Inc.
The Gores, who have hired UBS to help them win Warner, are going up against Blavatnik, a close ally of Warner Music CEO Edgar Bronfman who already owns 2 percent of the company. According to sources, Blavatnik has also bid around $3 billion for the music company. Blavatnik through a spokesman declined to comment.
Warner’s independent directors have hired a law firm to make sure they are protected should Blavatnik win and the bid be questioned, sources said.
Of course, Warner rivals Universal Music Group and Sony Music Entertainment are also circling, given that they are best placed to combine Warner’s recorded or publishing assets with their own businesses.
The winning bidder for Warner Music could try to cut down on costs by combining it with rival record company EMI, which is controlled by Citigroup and is expected to hit the auction block soon.
Still, one Wall Street source expressed skepticism that anyone would bid $3 billion given the long-term decline facing the music business.
There’s also a high degree of difficulty involved in winning back-to-back music auctions — not to mention the challenges of combining the two companies.
Although suitors were expected to submit binding bids by yesterday’s deadline, sources close to the sale process said banker Goldman Sachs has given potential buyers another day or two to finalize their numbers.
Warner is scheduled to release its second-quarter results on Friday, but the company is yet to confirm the date of its earnings.
The company reported a loss of $18 million on revenue of $789 million, down 14 percent, in the three months ended in December.
Meanwhile, KKR-backed BMG Rights Management is said to be out of the Warner mix and has set its sights on acquiring EMI. catkinson@nypost.com