AceShowbiz - Primary Wave announced on Monday, March 23, its plan to acquire the worldwide operations of Kobalt, including its owned copyrights catalog and digital royalty collection platform, amra. The acquisition, as detailed in a press release, is subject to regulatory approval and anticipated to close in the latter half of 2026.

While the financial terms of the deal have not been officially disclosed, sources previously told Billboard that the sale price could exceed $1.5 billion. Discussions reportedly involved Kobalt’s majority owners Francisco Partners, minority owners Dundee Partners, Kobalt co-founder and CEO Willard Ahdritz, and MUSIC's Matt Pincus. This deal is poised to create a formidable independent music entity valued at approximately $7 billion.

Under the terms, Kobalt will continue operating as a stand-alone company, while Primary Wave will leverage Kobalt’s publishing administration and the amra platform. Amra’s role in collecting mechanical and performance royalties directly from digital service providers enables Primary Wave to optimize profitability by bypassing fees typically paid to local collection societies and sub-publishers.

Primary Wave holds a vast portfolio valued at nearly $6 billion, featuring stakes in legendary artists’ catalogs including Prince, Whitney Houston, and Bob Marley. This acquisition will complement their existing assets and expand their footprint in music publishing and royalty collection.

In announcing the acquisition, Primary Wave Music CEO and founder Lawrence Mestel praised Kobalt CEO Laurent Hubert and his management team, who will remain in charge of Kobalt’s operations. Mestel emphasized the company’s commitment to transparency and a creator-first approach.

"Over the many years Laurent and I have known each other, I have always been impressed by the remarkable team he has built, as well as the extraordinary growth Kobalt has experienced under his leadership," Mestel said. "This acquisition will only enhance his efforts to provide creators individualized attention and specialized support at every stage of their journey and to provide a very significant amount of capital to Kobalt for continued growth."

Francisco Partners acquired approximately 90% of Kobalt in 2022, valuing the company at $750 million. The following year, Kobalt partnered with Morgan Stanley's Tactical Value group to launch a $700 million joint venture aimed at investing in music copyrights.

The recent announcement did not clarify whether the music assets acquired through the Morgan Stanley partnership, which include rights related to the catalogs of *NSYNC and AJR, are part of the deal with Primary Wave.

Kobalt CEO Laurent Hubert expressed confidence in the partnership, stating, "Primary Wave understands our vision of independence ... service, technology and creativity. They are true champions of the music community, and their support underscores the value of the independent ecosystem we are all building. Clients can remain confident that our mission and leadership remain entirely focused on their success."

Industry insiders reveal that the deal’s valuation reflects Kobalt’s annual earnings before interest, taxes, depreciation, and amortization (EBITDA), which are approximately $90 million. However, financial filings for the year ending June 30, 2024, showed a loss of $30.24 million on revenues of $794.4 million. This contrasts with the previous fiscal year, when Kobalt reported a $13.1 million profit on $522 million in revenue according to filings with the U.K.'s Companies House.

Sources familiar with Kobalt’s financials indicate that when evaluated under U.S. accounting standards and considering EBITDA adjustments, the company’s financial health appears stronger than the headline loss suggests.

Goldman Sachs & Co. LLC served as the financial advisor for this transaction.

This acquisition marks a significant consolidation in the independent music publishing sector, enhancing Primary Wave’s ability to service artists and rights holders with advanced technology and direct royalty collection mechanisms. The combined strength of Primary Wave and Kobalt is expected to reshape the industry landscape in favor of creators and investors alike, with a reinforced commitment to transparency and innovation.