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For sale, Electric And Musical Industries

By | Published on Tuesday 21 June 2011


EMI yesterday announced its holding company, EMI Group Global Limited, was kicking off one of those very fashionable strategic reviews, which is basically their owners Citigroup formalising their efforts to sell on the company.

In a short statement, the music major said it would be looking into the possibility of selling, recapitalising or floating EMI, albeit without a commitment to ultimately opt for any of those three, though everyone assumes a simple sale will then follow. In a more lengthy memo to staff, EMI top man Roger Faxon said he expected the review to result in a decision regarding ownership by the Autumn.

We’ve known Citigroup will sell EMI ever since the US bank took ownership of it after the collapse of equity group Terra Firma’s disastrous stint in charge of the British music major earlier this year. The bankers, who wrote off a couple of billion from their financing of Terra Firma’s 2007 EMI takeover, will be hoping that the recent flurry of interest in buying Warner Music will be replicated once they start inviting formal offers for their music company, possibly pushing up any possible asking price.

Before the Warner sale it was thought no one company would be interested in buying EMI outright, resulting in the music firm being split into at least two, with BMG favourite to buy the publishing catalogues, and one of the other music majors to takeover the record labels. But then at least four parties came forward to buy Warner outright, including the successful bidder, Len Blavatnik’s Access Industries. And it is thought – and presumably in Citigroup’s case hoped – that both Blavatnik and most of his competitors in the Warner sale will now come forward to bid for EMI.

Which is possibly good news for the aforementioned Faxon, whose grand plan for EMI is to fully integrate the firm’s publishing and sound recording businesses, a strategy he’s been banging on about for nearly a year now, and which he presumably hopes to actually implement once new ownership is in place. For him, a sale that resulted in a split of the company would be a disaster. Though, equally, if Blavatnik and Warner Music boss Edgar Bronfman Jr were able to engineer the long mooted EMI Warner merger, it’s not clear what that would mean for Faxon’s plans either.

But what does seem certain is that, after years of uncertainty, EMI might have new more secure ownership in place by the end of 2011. Assuming it still exists as a company at all.