Capitol CMG Agreed to Buy Reach Records But Bailed ‘Last Minute’ Over Price Dispute, Lawsuit Says

Capitol Christian Music Group (Capitol CMG) came close to buying Reach Records, a Christian hip-hop label co-founded by the rapper Lecrae, but backed out last-minute over concerns about the price — well after it was contractually allowed to do so, according to a lawsuit filed by the spurned merger partner.

The alleged deal, which has not previously been reported, would have seen the Universal Music Group imprint acquire Reach, an Atlanta-based indie, amid a recent boom in Christian music partly fueled by its popularity on social media platforms like TikTok.

But according to Reach, Capitol CMG scuttled the agreement “on the eve of closing the deal” by abruptly telling the smaller company that senior management had decided “the agreed-upon price was too high.“

“The parties agreed that the purchase price was not subject to renegotiation,” the company’s lawyers write in the Wednesday (Dec. 10) lawsuit, obtained and first reported by Billboard. “Defendant breached the contract by refusing to perform according to the binding terms.”

The actual purchase price Capitol CMG agreed to pay for Reach was not disclosed in court filings. In a statement issued after Billboard inquired about the lawsuit, Reach said it was Capitol CMG that had proposed the deal in the first place, before it “reneged on a contract at the last possible minute.”

“We aren’t trying to be nasty about this, but believe it’s critical that major institutions are held accountable for their actions and can’t move without consequence toward the independent creative community,” the company said. Reps for Capitol CMG and parent company UMG did not immediately return requests for comment on Friday (Dec. 12).

Founded by Lecrae and Ben Washer in 2004, Reach has grown into a player in the burgeoning faith-based hip-hop/R&B space. In addition to Lecrae himself — whose 2014 Anomaly reached No. 1 on the Billboard 200 — the label is home to Tedashii and Trip Lee and formerly to Andy Mineo, KB and others.

According to the lawsuit, Capitol CMG was negotiating “throughout 2025” to buy Reach before eventually settling on a final price that was approved in July by a UMG “investment committee.” The two sides then signed a letter of intent, which Reach says was a binding price that couldn’t be changed unless due diligence revealed “material adverse findings” — a typical provision in a merger agreement.

After no such red flags were uncovered, the lawsuit claims, the two sides started hammering out a full agreement. That is, until September, when Capitol CMG chief executive Brad O’Donnell allegedly informed Reach that “there was a layer of approval” still needed for the deal — and that it had been rejected due to the purchase price.

“Defendant has breached its obligation evidenced by the [letter of intent],” Reach’s attorneys write. “Given the parties’ extensive work on the deal, defendant’s last-minute, unjustified change of position as to the purchase price also constitutes a breach of its implied duty of good faith and fair dealing.”

In its separate statement, Reach said the sudden collapse of the deal came after eight months of negotiations, and after the company “altered parts of our business” to get ready for the merger: “We were literally at the finish line. It left us in complete shock.”