Francisco joins talks to buy music publisher Kobalt

(Bloomberg) – Francisco Partners is in advanced talks to acquire music publishing and technology service Kobalt Music Group Ltd., according to people familiar with the matter.

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The San Francisco-based buyout firm discussed a purchase price of around $750 million to $1 billion, the people said, asking not to be identified because the information is private.

No final decision has been made and negotiations could still break down, the people said. A representative for Francisco did not respond to requests for comment, while a spokesperson for Kobalt declined to comment.

Kobalt was founded in 2000 by Swedish entrepreneur Willard Ahdritz. He’s built one of the largest publishing companies in the music industry by offering songwriters a range of services that help them collect royalties, place their work on commercials and TV shows, and track their income through an app.

The company did not support their work and presented itself as a technology services company. Kobalt’s list of editors includes Paul McCartney and superstar producer Max Martin, according to its website.

There have been a lot of deals in the music industry as artists offload their catalogs to ventures backed by private capital and major record labels rebound from the CD market crash.

This potential sale has been a long time coming. Kobalt, whose investors have included Hearst Entertainment and Michael Dell’s MSD Capital LP, has hired advisers to explore a 2020 sale, Bloomberg News reported at the time. Last year, Kobalt Capital – a subsidiary that raises money to buy copyrights – agreed to sell a portfolio of songs to KKR & Co. and a partner for $1.1 billion.

That said, the copyright and music asset market has weakened in recent months due to rising interest rates and broader macroeconomic concerns. Concord and Broadcast Music Inc. both tried to find buyers, only to pull out of the market after bids fell short of expectations.

Francisco is active in the entertainment and media investment industry, having backed companies such as ticketing company Eventbrite Inc. and News Break newspaper. Led by CEO Dipanjan Deb, the company announced in July that it had raised $17 billion for its latest funding.

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