April 28 (Reuters) - Bertelsmann will combine

its music division BMG with rival Concord in a deal that would

create the world's fourth-largest music company behind industry

leaders Universal, Sony ( SONY ) and Warner, the German media group said

on Tuesday.

The cash-and-stock transaction will give Bertelsmann a 67%

stake in the enlarged company, while Concord's shareholders will

get a 33% stake and a one-time cash payment of $1.16 billion.

The combined company is expected to generate pro forma

revenue of $2.2 billion and core profit of $730 million in 2026,

making the deal among the biggest in the music industry's

history.

BMG and Concord are among the largest independent music

companies. BMG works with artists including Bruno Mars and Kylie

Minogue, while Concord is home to recordings by Creedence

Clearwater Revival, Miles Davis and R.E.M., among others.

SYNERGIES AND JOB CUTS

"In terms of overall value, this is one of the biggest deals

in our more than 190-year history," Bertelsmann Chief Executive

Thomas Rabe told Reuters. "We do not disclose a company

valuation, but you can assume the enterprise value is in the

double-digit billions," he added.

Music deals are currently done at earnings multiples of

around 15 to 20 times, Rabe said, which would imply an

enterprise value of roughly $13 billion using the midpoint of

that range, a Reuters calculation showed.

Rabe added that the music business has an above-average core

profit margin of 33%, and that synergies from combining the

businesses, IT and artificial intelligence would lift

profitability further.

He said job cuts were unavoidable but gave no figures.

BMG CEO Thomas Coesfeld, who will take over as Bertelsmann

CEO in 2027, will serve as chairman of the combined group, while

Concord CEO Bob Valentine will become CEO.

Bertelsmann said it expects no major regulatory hurdles and

aims to close the transaction in September or October 2026.

Concord is owned by the Michigan Pension Fund, an investment

managed by U.S.-based asset manager Great Mountain Partners.