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Citigroup say they will sell EMI to one buyer

By | Published on Wednesday 13 April 2011


Citigroup have reportedly assured EMI that when they sell the music major, sometime later this year, they will look for a buyer interested in taking the London-based music firm in its entirety, offering the company’s current management some hope that [a] they will be kept on after any sale and [b] Roger Faxon’s strategy of better integrating the organisation’s two primary divisions, recorded music and publishing, can continue.

As previously reported, the US bank confirmed that their ultimate intent was to sell off EMI after they seized control of the music company off Gary ‘The Guy’ Hands and his Terra Firma twonks back in February.

Even before Citigroup were in control, and as soon as Gary’s debt-laden supremacy at EMI started to unwind, many speculated a sale was in the offing, and that when it was sold this time EMI would be split into two, with the valuable publishing catalogue going to one of the equity groups busy buying up such things, most likely the KKR-backed BMG, while the record labels would most likely go to Warner Music.

But ever since Roger Faxon was given the top job above the whole EMI Group last year, he has insisted that splitting up EMI would be a bad idea. He has a vested interest of course, because if EMI was split up on sale there would be fewer opportunities for the current top guard at the major to continue in their current roles.

But there is also some logic to the Fax-man’s argument, surely the future of the music business requires an integration of the recordings and publishing parts of the industry, so that institutions that invest in new music can take a share of whichever royalties are most lucrative. And if the music company of the future will be an ‘integrated music rights machine’ it makes little sense for EMI to be split up now. Unless, of course, the constituent parts went to other emerging integrated music rights machines, like, say, BMG.

But whatever, once Citigroup were in control at EMI and a sale was very much on the agenda, Faxon had his financial PR men make sure he was popping up in pretty much every newspaper or magazine City types might read explaining why buying EMI in its entirety would be a much more sensible thing to do, rather than picking off a few choice parts.

And, according to The Guardian, Citigroup have now assured Faxon that when it comes time to sell – and rumour has it talks with some bidders are already under way – the bank will choose a bidder who has the interest and finance to buy EMI in its entirety as a going concern. Preferably with the intent of keeping Faxon and his team in place, though obviously once a sale is done that cannot be 100% guaranteed.

Whether Citigroup have reached this decision based on Faxon’s arguments, or via external factors, we don’t know. Certainly the current sale of Warner Music may have had an impact.

Partly because Warner was always seen as a potential bidder for the EMI record labels, but if the US major is sold off in its entirety (which it may be), then that probably will no longer be an option. And partly also because at least two and possibly three bidders have come forward interested in buying Warner outright, which is probably more than most people expected, offering Citigroup hope that a sale of EMI its entirety is more realistic than perhaps previously assumed.

In almost related news, the aforementioned Gary ‘The Guy’ Hands is reportedly close to selling his other entertainment business, the Odeon and UCI cinema chain. Terra Firma put the cinema group up for sale last month, possibly to bring in some quick cash to fill the £2 billion hole left by the EMI experiment. According to reports, Terra Firma are now in exclusive talks with BC Partners and Omers Private Equity about a sale, though no firm decisions have as yet been made.

But hey, Terra Firma are out of the music business now, so what do we care? We never need talk of those freaky financiers, and their incessant biscuit eating, ever again. Though for old times sake, and for customary legal reasons, we must stress that the freaky financiers at Terra Firma do not incessantly eat biscuits. Though I did once hear there were a lot of hobnobs at Terra Firma HQ, but I’ve no idea what that means.