Apple's purchase of Lala.com gives Warner Music $9 million back out of the $20 million it invested in the company, reveals a PaidContent report.
Warner "wrote down $11 million of its $20 million investment earlier last year, after disappointing results. Besides the money invested, WMG also had warrants worth $4 million which were exercisable based on whether Lala.com was able to help sell 25 million CDs in 5 years after the original 2007 agreement. No surprise, that didn’t happen."
A proxy statement filed this morning states that “In Dec 2009, the Company sold its equity interest in la la and entered into an agreement to terminate a memorandum of terms relating to the formation of an international joint venture for total cash consideration of approximately $9.0 million as part of a sale of la la to Apple Inc. The warrants had an exercise price that was in excess of the total merger consideration paid in respect of the shares for which it could be exercised and, therefore, expired at the time of the closing of the sale of la la to Apple Inc.”
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Warner "wrote down $11 million of its $20 million investment earlier last year, after disappointing results. Besides the money invested, WMG also had warrants worth $4 million which were exercisable based on whether Lala.com was able to help sell 25 million CDs in 5 years after the original 2007 agreement. No surprise, that didn’t happen."
A proxy statement filed this morning states that “In Dec 2009, the Company sold its equity interest in la la and entered into an agreement to terminate a memorandum of terms relating to the formation of an international joint venture for total cash consideration of approximately $9.0 million as part of a sale of la la to Apple Inc. The warrants had an exercise price that was in excess of the total merger consideration paid in respect of the shares for which it could be exercised and, therefore, expired at the time of the closing of the sale of la la to Apple Inc.”
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