Warner Music Sets IPO at $22 to $24 a Share

Warner Music Group Corp. moved closer to a planned initial public offering Monday when underwriters set a price of $22 to $24 a share in documents filed with the Securities and Exchange Commission. The transaction would value the fourth-largest music corporation at as much as $3.4 billion.

But only a fraction of the $581 million that is expected to be raised by selling 27.2 million shares will fund ongoing operations. The company, headed by Chief Executive Edgar Bronfman Jr., intends to use 98% of the sale’s proceeds to retire debt, according to the filing.

Investors, meanwhile, including Bronfman and Thomas H. Lee Partners, stand to pocket as much as $130 million by selling an additional 5.4 million shares, the filing shows.

Some analysts found those plans worrisome.

“If this is such a wonderful stock, why would insiders want to sell it?” asked David Menlow of research company IPO Financial Network.

The filing also fueled speculation that the company was preparing for further acquisitions. Warner Music purchased a 50% stake in Sean “P. Diddy” Combs’ Bad Boy Records last month for $30 million.