How much is too much? Early this morning, word 'leaked' that EMI seller Citigroup has picked a pair of winners, and scored some unexpectedly high price tags.
On the recording side, Universal Music Group owner Vivendi has agreed to purchase EMI for $1.9 billion (1.2 billion pounds).
That is a substantial premium over the estimated price tag of between $1.2 and $1.5 billion, and enough to outdo Warner Music Group owner Access Industries.
On the publishing side, the buyer will be a group spearheaded by Sony Music Entertainment and Sony/ATV, with a somewhat-similar price tag of $2.2 billion (more details on that later). That brings the total to $4.1 billion, considered far loftier than earlier estimations and potentially the result of some great salesmanship.
The information is now being reported by most major outlets, including the Wall Street Journal, New York Times, Guardian, and others. Citigroup, which seized EMI Group and is executing the sale, is expected to formally announce the sale of both units later today. These deals look fairly cooked, barring some late-stage development.
Universal Music Group is the largest of the majors, and the absorption of EMI's recording collection only makes it bigger. The question now is whether regulators take notice, and indie consortium Impala has already announced its intentions to fight the combination. The regulatory environment in the US seems far friendlier, and will probably involve a light review at most.
In order to seal the deal, Citigroup assumed liabilities related to about 21,500 EMI pensioners. That was a major sticking point in the ongoing negotiations, with total liabilities potentially reaching $400 million.
Comments Closed
Earl Friday, November 11, 2011
b-to-the-p Friday, November 11, 2011
Who gets Abbey Road Studios?
Billy Friday, November 11, 2011
"The regulatory environment in the US seems far friendlier"
Friendlier as in not really regulatory.
lc Friday, November 11, 2011
Publishing units more expensive than recorded music, it's something new.
@iancr Friday, November 11, 2011
ian c rogers
And then there were 3...
@swartretort Friday, November 11, 2011
Adam Swart
So happy to be out of this biz/B.S.
@tonygrott Friday, November 11, 2011
Tony Grotticelli
It has been good while it lasted.
@jingw Friday, November 11, 2011
Jing
Big big news, but way way overvalued
celesta Friday, November 11, 2011
official statement just issued
For Immediate Release
November 11, 2011
Vivendi and Universal Music Group (UMG) to Purchase EMI Music
London, Paris, New York -- Vivendi and its subsidiary, Universal Music Group (UMG), announced today that they have signed with Citigroup Inc. ("Citi") a definitive agreement to purchase EMI's recorded music division for a total consideration of £1.2 billion representing 7 x EBITDA prior to synergies.
EMI Group is one of the world's most prominent music companies, possessing a rich musical legacy. Its recorded music division, EMI Music, operates around the world and represents artists spanning all musical tastes and genres through record labels including Angel, Astralwerks, Blue Note, Capitol, Capitol Latin, Capitol Records Nashville, EMI Classics, EMI CMG, EMI Records, EMI Records Nashville, Manhattan, Parlophone, Virgin Classics and Virgin Records.
Jean-Bernard Lévy, CEO of Vivendi, stated: "We are very proud to welcome EMI into the Vivendi family. We all respect the labels within EMI as well as the artists and employees who contribute to its success. They will find within our Group a safe, long-term home, headquartered in Europe." He then added: "We plan to acquire EMI's recorded music division on attractive terms, adhering to our principle of total financial discipline. We are confident that we will be able to create additional value for our shareholders thanks to our knowledge of the industry and our proven track record of successful integration. Lucian Grainge's personal experience and heritage will be a major asset in making the combined entity a great success."
Lucian Grainge, Chairman & CEO of Universal Music Group, added: "This is a historic acquisition for UMG and an important step in preserving the legacy of EMI Music. For me, as an Englishman, EMI was the preeminent music company that I grew up with. Its artists and their music provided the soundtrack to my teenage years. Therefore, UMG is committed to both preserving EMI's cultural heritage and artistic diversity and also investing in its artists and people to grow the company's assets for the future. As a result, we will be better positioned to fully capitalize on the many new and exciting opportunities in the current marketplace, and also able to better serve our artists, songwriters and business partners, while offering fans even more choice."
Stephen Volk, Chairman of the Board of EMI Group and Vice Chairman of Citigroup, added: "We believe that this transaction accomplishes Citi's objective of maximizing the value of EMI, giving EMI Music a partner in Universal Music that appreciates EMI's rich cultural legacy, its incredible stable of musical talent, and its employees who work so hard to deliver successful outcomes for the artists they represent. We are grateful to Roger Faxon, his management team and all of EMI's staff for the continued success of this business during Citi's ownership."
The transaction has been approved both by the Management Board and the Supervisory Board of Vivendi. Closing of the agreement remains subject to a number of conditions, including approvals of regulatory authorities in the countries and continents concerned.
Vivendi will finance the transaction from its existing credit lines. Concurrently, Vivendi and UMG will also sell 500 million euros worth of non core UMG assets.
Vivendi and UMG have been advised by Allen & Co. and SJ Berwin on this transaction. Citi Global Banking acted as financial advisor to Citi and EMI. Clifford Chance LLP, Shearman & Sterling LLP and Freshfields Bruckhaus Deringer LLP acted as legal advisors to Citi and EMI.
wallow-T Friday, November 11, 2011
I know hardly anybody cares, but this acquisition puts nearly all of the historic legacy of recorded classical music -- nearly all of it -- under one firm: Decca, Phillips, RCA, Deutsche Gramophon, and now EMI, naming just the most important brands. The only big piece outside the firm is Columbia/Sony.
I think this acquisition means that Nipper can come back, at least in some markets! :-) I recall reading that Nipper's rights had been split between RCA and EMI.
wallow-T Friday, November 11, 2011
(My bad, Sony has RCA, thus no Nipper resurrection.)
"Never Mind."
Criminals Friday, November 11, 2011
Citigroup is a mafia gang and its members deserve nothing less than one last meal of their choice.
billeeto Saturday, November 12, 2011
So Geffen comes out of reclusive retirement from musbiz to back Bandier's Sony team against the BMG upstarts for a higher bid on EMI Pubco than most anticipated. Does BMG go kaput and lose KKR's backing now that they lost out on acquiring major marketshare that would have come from EMI acquisition, or do the Germans soldier on?
interesting and a little pathetic that Guy Hands has recently brought another lawsuit, this time in the UK, saying Citi should never have taken EMI away from him, as he never technically defaulted and the assets worth obviously worth more than they said ... of course the current buyers (UMG and SATV and their backers) are indemnified and don't take Hands seriously. Remember Hands paid $6.8 billion for EMI in 2007 and lost $2.5 billion loss when Citi took over after his default. From that viewpoint, today's $4.1 billion auction purchase looks reasonable.
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