Primary Wave is in advanced talks to buy Kobalt Music Group in a transaction valued over $1 billion, according to sources. The acquisition would combine Primary Wave's nearly $6 billion portfolio with Kobalt's assets to form an independent music powerhouse exceeding $7 billion. Kobalt, the world's largest independent music publisher, has grown under recent ownership and partnerships.
Primary Wave, a major player in music rights with stakes in catalogs from artists such as Prince, Whitney Houston, Bob Marley, and Britney Spears, is close to acquiring Kobalt Music Group. Billboard estimates the combined entity would hold over $7 billion in assets. Primary Wave's portfolio is valued at nearly $6 billion and includes rights to works by Stevie Nicks, James Brown, Notorious B.I.G., Olivia Newton-John, Boyz II Men, Jackson Browne, John Mellencamp, Luther Vandross, Burt Bacharach, Alice Cooper, and the Cars.
Kobalt was purchased in 2022 by a group led by Francisco Partners for a $750 million valuation. Under CEO Laurent Hubert, the company has expanded, boosting profitability and forming a joint venture with Morgan Stanley’s Tactical Value group, backed by $700 million for music copyright investments. Sources indicate Kobalt now generates about $100 million in EBITDA and could sell for more than $1.5 billion if the Morgan Stanley assets are included. Goldman Sachs is advising Kobalt on the potential sale, as it did in 2022.
Francisco Partners holds a 90% stake in Kobalt, with additional ownership by Dundee Partners, Matt Pincus, and founder Willard Ahdritz. Recent Kobalt acquisitions through the joint venture include rights related to *NSYNC's catalog, which has nearly 32 million U.S. album consumption units, and AJR's catalog with 5.4 million units. The company also launched KOSIGN to help independent artists collect publishing royalties.
Kobalt's fiscal year ending June 30, 2024, showed a $30.24 million loss on $794.4 million revenue, compared to a $13.1 million profit on $522 million the previous year. Sources attribute the loss to doubled administrative expenses to $119 million and higher finance costs of $48 million, but note strong operating profit under U.S. accounting principles. All involved parties declined to comment.
The deal would give Primary Wave its own publishing administration via Kobalt and access to AMRA, Kobalt's global collection organization, potentially reducing fees and enhancing profitability.
