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Citigroup committed to selling as new bidder enters race for EMI

By | Published on Monday 10 October 2011


EMI owner Citigroup still plans to sell the major music company despite, as previously reported, receiving less bids for the firm than originally anticipated, in part because of instability in the wider money markets. Or at least that’s what unnamed insider sources have told the Mail On Sunday.

As previously reported, after a relatively high number of bidders came forward for Warner Music earlier this year, Citigroup was hopeful that there would be a similar bidding war for EMI, forcing up the asking price. But most non-music company bidders, including various private equity groups, have decided not to bid, leading to speculation the US bank might hold off actually selling now, and wait for the wider economy to recover. However, if the Mail’s sources are to be believed, that is not likely to happen, and a sale could be complete by the end of the month.

As the deadline for final offers passed last Wednesday it was thought five maybe six groups were still bidding, the Universal, Warner, Sony and BMG music companies, Ronald Perelman’s MacAndrews & Forbes and, maybe, a consortium led by Ron Burkle. Though on Friday a seventh bidder appeared on the scene at the very last minute, a consortium led by James Caparro, a one time senior exec within both the Universal Music and Warner Music empires, who for much of the last decade has been working in music distribution.

Caparro has a company called Yamani Global Equities, which has teamed up with private equity types Alliance Warburg Capital Management, seemingly to bid for the whole of EMI. In a press release announcing his intent to bid, Caparro said: “This is the first step in the execution of our turnaround plan to guide EMI’s assets through the integration of our five prong revenue model that will lead the company into providing consumers and customers with music and entertainment services utilising 21st century technologies”. Sounds like fun.

Some are wondering whether Caparro, who, as far as everyone is aware, has made no previous attempts to approach EMI about a bid, and therefore hasn’t had access to the information about the company shared with other bidders, can enter the race so late in the day. Reuters also noted that it’s rather rare for companies to issue press releases announcing their intent to bid for a company, especially when any formal talks between sellers and buyers are usually covered by Non-Diclosure Agreements. But, if this is a serious bid, it does add an interesting new element to this long, drawn-out story.

Elsewhere, there were reports this weekend that Warner Music might withdraw its bid for the EMI companies, though that does seem to be because parent company Access Industries and its owner Len Blavatnik are getting impatient regards just how long and drawn-out this story has been. Though, that said, given Citigroup has indicated it is now looking to close a deal pretty damn quickly it seems unlikely Team Warner/Access would step back just yet, more likely the Russian billionaire was indicating that if the US bankers were to postpone a sale for another six months he’d withdraw from the bidding permanently.