Bertelsmann AG and Sony have finalized a merger agreement that will bring some of the world's top pop artists under one roof as music companies shore up their strength in the face of rampant file-swapping on the Internet.
The newly created Sony BMG will be equally owned by Sony and Bertelsmann, the two companies said in a statement Friday. It will be the world's second-largest music company behind Universal Music Group, a part of Vivendi Universal SA.
Intially announced a nearly month ago, the deal is aimed at remaining competitive as the music industry struggles with losses blamed on the ease of exchanging music files on the Internet.
No other financial terms were released for the deal. The companies said the merger would not affect either company's music publishing businesses, CD and DVD productions, deliveries or Sony's Japanese music business.
The deal is subject to approval from regulators in the United States and the European Union.
The merger will put some of music's biggest stars under a common corporate roof. Sony Music Entertainment's labels include Columbia, Epic, and Sony Classical, and it is home to pop artists including Bruce Springsteen, Beyonce Knowles and Celine Dion.
Among the stars on BMG's various labels are Dido, the Dave Matthews Band, Christina Aguilera, Alicia Keys, Avril Lavigne and Elvis Presley.
The deal could still could run into trouble from EU regulators, who blocked a deal between Warner Music and EMI three years ago, saying it could lead to an oligopoly of four firms controlling 80 percent of the European market.
But changes in the market may work in Sony and Bertelsmann's favor, antitrust lawyers have said, noting that with advances in the ability to download music over the Internet, the two could argue they need to be bigger to survive.
The deal, which also includes Time Warner's Warner/Chappell Music publishing business, would create one of the world's largest independent music companies and include some of the industry's biggest artists, such as Madonna, R.E.M. and the Red Hot Chili Peppers.