As a result, Bertelsmann will receive approximately USD 900 million in value for its 50 per cent stake plus USD 300 million of its share of cash on Sony BMG's balance sheet. Post-deal, Sony BMG will be called Sony Music Entertainment and will be a wholly owned subsidiary of Sony Corp of America.
Both parties will continue to share the company's manufacturing and distribution requirements between Sony's manufacturing subsidy- Sony DADC and Bertelsmann's services company, Arvato Digital Services, by extending agreements with Arvato for up to six years.
''This acquisition will allow us to achieve a deeper and more robust integration between the wide-ranging global assets of the music company and Sony's products, operating companies and affiliates and enables us to offer a total entertainment experience to consumers.'' said Sony chairman and Chief Executive Officer Howard Stringer.
Sony is likely to push its catalogue of its artistes that include Britney Spears, Foo Fighters and Bob Dylan and their repertoire aggressively to sell the company's electronics products especially the mobile devices produced by Sony's Ericsson unit.
The unification of Sony's interest in media and entertainment will also enable the company to bundle revenue streams -- recordings, publishing, merchandise, ticket sales -- into single packages for its artistes.
The deal also highlights the change in attitudes in music industry business. When Sony and BMG merged in 2004, consolidation was seen as the lone path for the majors to survive. Universal had acquired Polygram in 1999, and EMI and Warner started their talks in 2000.
In recent years, the opposite tack has taken hold with Warner Music and EMI, taken over by private investors groups, leaving Sony Music as the only major owned by a company with interests in film and television.
Bertelsmann will keep a toehold in the European music marketplace by taking over a limited number of music catalogue assets from Sony BMG in Germany, the UK, France and Italy. The revenue that it will receive from the buyout will be invested in the US market, added the release.