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Citigroup now compromising to speed up EMI sale

By | Published on Thursday 10 November 2011


Citigroup is finally budging on some key stumbling blocks in its ongoing talks to sell on EMI, or so insiders are saying. Turns out walking away from the negotiating table was a clever move by teams representing Warner and Universal.

As previously reported, both Warner and Universal are interested in buying the EMI record companies, but both withdrew their bids late last month amid disagreements with the British major’s current owners over price, pension and lease liabilities, and the costs of any regulatory investigations into a takeover of EMI’s labels by an existing major player in the music space.

Universal returned to the negotiating table last week, and it’s thought that this time the US bankers have been more flexible, possibly accepting a lower up front price in return for Universal taking on the various risks and liabilities associated with the acquisition. As also previously reported, a Universal purchase of the EMI labels is likely to result in a rigorous competition regulator investigation in Europe, and pan-European indie labels trade body has already called on the EU to pursue every avenue in investigating that deal, should it happen.

Of course there have been various rumours throughout the bidding process for EMI that Citigroup might just keep hold of the music firm in the short term, and have another go at selling when the credit markets improve, perhaps allowing more private equity types to bid, which would possibly up the asking price.

Though, while still a possibility, it seems that’s the worst case scenario option for the bankers, especially as a deal to sell EMI’s publishing business seems likely to be in place in the next few weeks, and it would be a pain for that to fall through just because no deal can be done on the less valuable record labels (just holding onto the labels alone would be the worst worst case scenario).