Warner and BMG back to being favourites in EMI bidding race
By CMU Editorial | Published on Thursday 27 October 2011
Warner Music and BMG are currently the front runners to take ownership of the two EMI businesses, according to Bloomberg.
Citigroup are still to announce what they will do with the music company they repossessed from former owners Terra Firma at the start of the year, but insiders are still saying that the bank will go ahead with a sale of the firm, despite bids not being as numerous as originally hoped, and that in order to maximise their profits it will almost certainly be sold as two separate entities, record labels and music publishing.
It is thought that Warner will get the former and BMG the latter, which is the outcome many were predicting a year ago before Citigroup had even seized ownership of the company. In recent weeks Universal Music had been mooted as the frontrunner for the EMI record companies, but Bloomberg sources say that it is likely to be outbid on price by Warner Music’s new owners Access Industries. According to said sources, Citigroup and Access are currently discussing EMI’s pension liabilities, but if an agreement can be reached on that, the two sides could look to close a deal next week.
Although it seems less clear cut on the publishing side, where BMG and Sony/ATV are the two contenders, reports suggest that Sony/ATV – which has put a consortium in place to raise the money required to bid – has asked for more time to raise further funds, which gives BMG the advantage. The joint venture between Bertelsmann and equity group KKR have more ready access to cash, and according to the New York Post the former’s new CEO, Thomas Rabe, has been in the US this week to help with their bid.
The only serious offer that would keep EMI together as one business, and as an autonomous entity, is that of Ron Perelman’s MacAndrews & Forbes. Although probably the simplest of the deals on the table – there would be no obvious competition law issues – and the one that would potentially allow EMI’s current leadership to stay in situ, most sources seem to suggest Perelman simply can’t afford a bid that would match the money to be made by selling labels and publishing separately.