Hypebot has just published EMI CEO Roger Faxon’s letter to his staff, which was sent out earlier today as the sale of the company’s recorded music division to Universal Music Group was announced. In it, he says that the splitting up of EMI’s recording and publishing divisions comes “not because there was no one interested, but because at the critical moment the credit markets seized up”.
He also makes reference to the length of time that the deal is likely to take to be completed. Not, however, due to regulatory hurdles or attempts to block it by organisations such as IMPALA, but because of the tricky matter of the “legal separation of the two businesses”. Therefore, he says, “it is likely that EMI will remain much as it is today through and perhaps well past the end of our fiscal year”.
You can read Faxon’s letter in full here:
The bids are in, the analysis is done, and the deal has been sealed. So, the time has finally come to tell you the fate of our business. Let me give you the unembroidered bottom line. EMI is to be split, with EMI Music to be acquired by the Universal Music Group. I hope to be able to share more detail on EMI Music Publishing shortly. I have enclosed Citi’s press release for you here.
As all of you know, it was my ambition to keep EMI together as a stand-alone business in pursuit of our shared strategy. But that is not to be, not because there was no one interested, but because at the critical moment the credit markets seized up. With credit spreads widening and little access to debt capital it became difficult for financial bidders to formulate compelling proposals at the right price.
But the enthusiasm of trade bidders remained. They saw great businesses and were willing to step up. In the case of EMI Music, Universal won the day not only on price but also on other critical terms. As for Citi, it has always been clear that they were not long term owners no matter how much they admired our business and our team. In fact that is the reason they initiated the sale process to begin with. So, when faced with an attractive offer from Universal, they decided to sell.
So, the decision has been taken, the two parts of this great business are to move along separate paths. But, before ownership is transferred much needs to happen.
Our biggest task will be to complete the legal separation of the two businesses, which many of you know is not a trivial matter. Equally, Universal will need to clear the necessary regulatory hurdles before they can take ownership. And that too will take time and effort. So, it is likely that EMI will remain much as it is today through and perhaps well past the end of our fiscal year.