Monday 21 March 2011, 12:10 | By CMU Editorial
Citigroup talking to EMI bidders
So, while all attention is on the bidding to buy some or all of the Warner Music Group, according to the New York Post US bank Citigroup is concurrently in quiet talks with interested bidders about them buying some or all of EMI.
As previously reported, we’d expected EMI to be on the block this spring for some time as we knew it was highly unlikely former owners Terra Firma would stump up the required new money to stop the music major defaulting on its bank loan covenants with Citigroup. In the end Citi swooped sooner than most expected, including, it seemed, Terra Firma, taking ownership of the music firm at the start of February.
However, despite immediately admitting it was indeed indeed looking to sell off the music company eventually, the bank didn’t seem in any rush to do a deal, insisting it was business as usual for EMI in the short term.
But by this point Warner Music’s current owners had already let it be known they were considering offers for some or all of their business. Although there were initially over ten bidders interested in Warner, at least some of which will presumably also be interested in EMI, some have speculated that if Citigroup put off a sale too long its music company will end up being seen as the runner up prize, which might have a detrimental affect on offer price.
But while Citigroup has not as yet put out any official call for bids for some or all of EMI, according to the Post talks are still ongoing with possible bidders. This isn’t really much of a surprise, I suppose, given the bank was rumoured to be already talking to some potential buyers before they had even taken control of the music company earlier this year.
According to the Post, many of those currently talking to Citigroup about EMI are already bidding for Warner, including Len Blavatnik’s Access Industries and Ron Burkle’s Yucaipa Co, the latter of which has reportedly allied with Napster co-founder and Spotify adviser Sean Parker for its big music bids.
Other interested parties include Sony Music, whose Sony/ATV division is already bidding for Warner Chappell. It’s not clear which bit of Sony is bidding for which bit of EMI. Meanwhile, Universal Music, which dropped out of the running for Warner, is reportedly still discussing EMI with Citi.
And, of course, if Warner Music decides to only sell off its publishing business, then its chief, Edgar Bronfman Jr, is known to be interested in buying EMI’s record labels. Though any deal involving an existing music major would surely come with at least some regulatory concerns, with competition officials certain to be interested in any deal which makes a major music company even bigger.
It is thought Citigroup is talking to bidders about them buying both EMI outright, or one part or another of the company.
As much previously reported, current EMI chief Roger Faxon believes his company only has a viable future as combined music publishing and record company – with more integration between its two main divisions – and he’s been saying so in pretty much every newspaper or magazine an investment type might read of late.
Though, while many in City circles have come round to his way of thinking on this, that EMI will be sold to one buyer as a going concern is by no means a foregone conclusion.