After reviewing bids, Citi looks to sell EMI in pieces - sources
* Deal could come by the end of next week-sourcesBy Yinka Adegoke and Nadia DamouniNEW YORK, Oct 12 (Reuters) - EMI Group Ltd, the home of
Coldplay and Katy Perry, looks increasingly likely to be sold
off as two separate businesses — recorded music and song
publishing — after final bids came in last week, according to
several people familiar with the matter.The British music company is reviewing competing offers for
EMI Publishing from BMG Music, a joint venture between
Bertelsmann and private equity firm Kohlberg Kravis Roberts , and Sony/ATV — a joint venture between Sony Corp and the estate of Michael Jackson, these people said.BMG-KKR and Sony have submitted the highest offers for
EMI’s publishing business, the people said. One of them added
that the two bids came in close to each other.Vivendi SA’s Universal Music Group and Len
Blavatnik’s Warner Music Group are vying for the recorded music
side of EMI, people familiar with the matter said.U.S. bank Citigroup , which took control of EMI in
February, is expected to pick winning bidders for the
businesses by the end of next week, the people said.While Warner Music has also been interested in buying all
of EMI, significant anti-trust hurdles on the publishing
segment, as well as challenges in lining up financing in a
volatile market, makes such a deal unlikely, the people said.Moreover, Blavatnik, whose Access Industries bought Warner
Music in May for $3.3 billion, has privately expressed
reluctance to bid aggressively so soon after winning Warner
Music, according to two of the people close to the transaction
process. WMG Chairman Edgar Bronfman Jr. has long coveted EMI,
and losing out on the chance to buy it once again is certain to
hasten his departure from the company.EMI Chief Executive Roger Faxon has publicly argued against
splitting the business, saying that each side benefits the
other. Since the former head of EMI’s publishing operation took
over leadership of the entire company, he has pushed to more
closely integrate both divisions, making it potentially more
difficult to split the company.But the chances of selling EMI as a whole were hurt by the
tightening of credit markets in recent weeks, which have
prompted banks to stiffen lending terms, thereby making deals
more expensive, the people familiar with the matter said.EMI, whose artist roster includes the Beastie Boys, the
Beatles and Keith Urban, is seen as one of the last remaining
attractive assets in the music industry. The company said in
June that it was exploring strategic alternatives and has since
been running an auction, which two sources said has been code
named “Project Nile.”Dividing EMI will likely generate richer bids for Citi,
which is hoping to collect as much as $4 billion from the
auction, said people familiar with the matter.EMI’s publishing unit is the stronger of the two assets and
has attracted bids of roughly $2 billion from Sony/ATV Music
Publishing and BMG Music Rights, according to two people.
Sony/ATV is run by Marty Bandier, who is best known in the
music business for building EMI Publishing into the industry’s
premiere publishing operation over 16 years before leaving in
2006.BMG, which is a joint venture of German media giant
Bertelsmann and private equity firm KKR, has made a string of
music publishing acquisitions in the last year. The venture
does not have a recorded music arm.Universal Music Group is currently the frontrunner for
EMI’s recorded music division, which includes the Capitol and
Virgin labels, one of the people said.A Citi spokeswoman declined comment. A representative for
EMI was not immediately available for comment. All bidders have
declined to comment throughout the sale process.
