In a story already filled with twists and turns, we’ve arrived at another major moment in the battle to (potentially) acquire Believe.

Earlier this month, MBW reported that the Autorité des Marchés Financiers (AMF), France’s equivalent to the Securities and Exchange Commission in the US, had been dragged into this saga.

Believe’s board turned to the AMF to adjudicate whether a particular move by a consortium led by Believe founder/CEO, Denis Ladegaillerie, was lawful.

That decision is now here, with the AMF declaring that an attempt by the Ladegaillerie consortium to “waive” a previously agreed condition of its bid “infringes the guiding principles of public bid law” in France – “in particular the principles of fairness, transparency and the free play of bids and overbids”.

Those are the (translated) words of Marie-Anne Barbat-Layani, Chair of the AMF, in a letter to Believe’s board sent in the past 24 hours and obtained by MBW.

Why is this so important?

Because if the Ladegaillerie consortium is/was able to “waive” the condition, it would all-but-guarantee its acquisition of around 72% of Believe (for starters).

That 72% acquisition, if it went ahead, would essentially end any possibility of a takeover of Believe by Warner Music Group. WMG is known to be considering whether to make a rival offer to buy the French company at a higher price than the Ladegaillerie bid.

Ergo, the AMF’s decision would seem to keep alive Warner’s chances of officially entering a bidding process for Believe.

How we got here – and why the AMF says a Ladegaillerie ‘waiver’ would be in ‘violation of the principles of fairness’

On February 12, Believe announced that the Ladegaillerie consortium – made up of Ladegaillerie, TCV, and EQT – had privately agreed deals for the acquisition of 71.92% of the company.

This 71.92% block of equity is currently held by four shareholders: Ventch and Xange, plus TCV and Denis Ladegaillerie himself.

Believe said that this Ladegaillerie takeover of 71.92% would be subject to two conditions: (i) Regulatory approval in France; and (ii) the issuance to Believe shareholders of the board’s approval of Ladegaillerie’s bid, aka a “fairness opinion” informed by a report from independent experts.

On February 21, Believe’s board received a private expression of potential interest in buying the company from Warner Music Group.

Then, on February 27, WMG told Believe that it was considering making a takeover offer for Believe at a materially higher value than the Ladegaillerie bid. (WMG’s potential bid would value Believe at around USD $1.8 billion or more, Warner revealed; Ladegaillerie and co’s bid values the company at around USD $1.6 billion.)

The next day (February 28), the Ladegaillerie consortium announced its intention to “waive” one of these previously-announced conditions for its 71.92% ‘Block Acquisitions’ – the one requiring the Believe board to issue an approval of the bid to shareholders (aka the “fairness opinion”). This would prospectively have accelerated the Ladegaillerie consortium’s takeover of the 71.92% stake.

However, Believe’s board then consulted with the AMF to help it decide whether or not Ladegaillerie’s “waiver” attempt was legally sound.

“By exercising… its right to unilaterally waive the said condition precedent… when WMG had made known an expression of interest valuing Believe at at least 17 euros per share, the consortium, which was aware of this non public information, granted itself a decisive advantage in the success of its bid, in violation of the principles of fairness, transparency and the free play of bids and overbids.”

Marie-Anne Barbat-Layani, AMF

In her letter to Believe’s board published yesterday (March 22), the AMF’s Marie-Anne Barbat-Layani wrote that the previously-agreed conditions of the Ladegaillerie consortium’s approach meant that “the execution of the sale agreements [are] dependent on the favorable opinion of [Believe’s] board of directors”. She called this “an essential regulatory stage in the progress of a public offer”.

Barbat-Layani asserted that, by attempting to “waive” the board approval condition after Warner Music Group had privately made known an expression of interest in potentially bidding for Believe at a particular price (€17-per-share or above), “the [Ladegaillerie] consortium, which was aware of this nonpublic information, granted itself a decisive advantage in the success of its bid, in violation of the principles of fairness, transparency and the free play of bids and overbids”.

While it was consulting with the AMF over the “waiver” attempt by the Ladegaillerie consortium, Believe’s board put on ice a request from WMG to review “confidential” financial material about Believe.

With the AMF’s review of the “waiver” now complete, we await news on when/whether WMG will get its hands on this “confidential information”.Music Business Worldwide