*A clarification has been added to this story.

New York - Sony (NYSE: SNE) announced on Tuesday that it has agreed to buy Bertelsmann's 50% stake in their four-year-old major record label joint venture Sony BMG, in a deal valued at $1.2 billion. "After a careful and thorough review, we made the strategic decision to sell our investment in this joint venture to Sony, a step that we believe will benefit the stakeholders of both our companies," said Bertelsmann chairman and CEO Hartmut Ostrowski.

"This move is consistent with our new growth strategy and will enable us to focus on our defined growth areas."

The company will now be called Sony Music Entertainment, and become a subsidiary of Sony Corporation of America.

Under the agreement, the companies will continue to share the company's manufacturing and distribution requirements between Sony's manufacturing subsidiary, Sony DADC, and Bertelsmann's services company, Arvato Digital Services.

Bertelsmann will also be taking over selected European music catalog assets from Sony BMG.

Bertelsmann said its Bertelsmann Music Group (BMG) will now focus on establishing a licensing and management platform to exploit and market music rights under the BMG brand.

Sony Music Entertainment will continue to operate labels including Arista Records, Columbia Records, Epic Records, J Records, Jive Records, RCA Records and Zomba, which count among their ranks top-selling artists such as Celine Dion, Alicia Keys, Bruce Springsteen and Justin Timberlake.

Clarification: There were discrepancies in the valuation of the deal among various reports. Sony effectively paid $900 million, and not $1.2 billion, if one takes into account the fact that half of the $600 million the joint venture had in cash already belonged to Sony. Bertelsmann, for its part, claims the deal should be valued at $1.5 billion, if one takes into account relevant tax advantages.

Poll: Is 50% of Sony BMG worth $1.2 billion?

Related Links:
http://snipurl.com/3bbmv

http://snipurl.com/3bbma

http://www.bertelsmann.com

http://www.sonybmg.com