Sony Music Entertainment to acquire Kobalt Music's recorded music operations

Sony Music Entertainment Inc. struck a definitive agreement to fully acquire the recorded music operations of Kobalt Music Group Ltd. for $430 million, subject to customary working capital and other adjustments.

The acquisition will include AWAL, a recorded music label and distribution business mainly for independent recording artists, and Kobalt Neighbouring Rights, a performance rights collection agency for artists and independent labels, according to a Feb. 1 filing.

AWAL and Kobalt Neighbouring Rights will become a new stand-alone division within Sony Music Entertainment, with the latter's independent music distribution company The Orchard providing support. AWAL will still be able to sign, develop and market its own artists while gaining access to more resources and partnerships as well as a global distribution footprint. Sony Music Entertainment artists and The Orchard-distributed labels will also use Neighbouring Rights' infrastructure and collection network.

Lonny Olinick will remain CEO of AWAL following the deal, which is subject to regulatory approvals and other customary closing conditions.

The transaction comes almost five months after Kobalt Music reportedly tapped advisers for a potential sale of the company, among other strategic options.

Sony Music Entertainment is a wholly owned subsidiary of Japan's Sony Corp.