EMI chief briefs staff on takeover process
By CMU Editorial | Published on Tuesday 15 November 2011
EMI top man Roger Faxon has sent a longer memo to staff at the music major following confirmation this weekend that one half of his company is due to be sold to Universal, while the other half will go to a consortium led by Sony/ATV.
The second memo followed a note on Friday confirming the first sale, of the EMI record companies by Citigroup to Universal, and goes into more detail about what the split and sale of the company will mean for those working for the major.
It’s a long letter, including a FAQs section, but here’s the summary:
– As we already knew, the Sony/ATV acquisition of EMI Music Publishing, like Universal’s purchase of EMI Music, is subject to regulatory approval, so the EMI Group will carry on as normal for a few months yet while that process is completed. Sony and Universal will make the initial submissions to competition regulators, though Faxon admits EMI’s legal and business affairs teams will have quite a workload providing said regulators with the information they require.
– Work is already underway to achieve the legal separation of the EMI company. EMI’s VP Finance, Jade Moore, formerly with Terra Firma, is leading that work. It’s a complicated process involving the boards of the various companies around the world that make up the EMI Group.
– EMI has also pledged to help Sony/ATV with its rather complicated plan to “issue bonds as a part of the acquisition financing”. No, I don’t know what that means either, but presumably finance dudes at both Sony/ATV and EMI do.
– It’s not clear how long it will take for the two takeover deals to complete (assuming they are not blocked by competition regulators, of course), nor which deal will be completed first, though Faxon says they don’t have to complete at the same time.
– In the months it takes for legal split and regulatory approval to be completed, it will be business as usual at EMI, with both the labels and publishing business able to enter into new deals and licensing arrangements, albeit with a slightly tweaked approvals process.
– Faxon says he’s unable to comment on what plans Universal and Sony/ATV have for their acquisitions beyond what was said in the two buyers’ press releases on Friday. In fact, because of competition rules, the new owners are specifically not allowed to provide any instructions to EMI execs regarding future direction until the regulatory process is completed. The same applies to integration plans. So strict are the rules regarding communication between seller and buyer where regulatory investigations are underway that guidelines will be given to EMI staffers on what they can and cannot do, with which Faxon urges his staff to comply, because “truly there are some very serious consequences for EMI if we screw this up”.
– But what about redundancies, Faxon? That’s what everyone wants to know. Well, business as usual seemingly means jobs are safe until after the sale transactions are completed. Which means a few more months job security before the inevitable downsizing, especially on the labels side.
So, there you go, pretty much everything Faxon could say in such a regulated scenario has been said. Though the various questions we posed yesterday about the EMI sale remain unanswered, very possibly because no one in authority at EMI, Universal or Sony/ATV has considered them, or is even in a position to do so just yet.