Like a spurned girl at a high school dance, EMI just can’t get picked up. Last week, there were two main suitors in the bidding war for the label group and publishing company, Universal Music Group and Len Blavatnik, who owns Warner Music Group. Now, both label groups are out of the running. Universal dropped out last week, and over the weekend, according to Financial Times, Blavatnik is out too. Apparently, he made an offer of about $1.5 billion for the label division of the U.K. company, which is less than the at least $1.7 billion Citi is looking for. Keep in mind that Terra Firma, led by Guy Hands, acquired EMI for $8.4 billion at the height of the credit market. When Citi took it over earlier this year, they wrote off 65% of its loan, leaving them with $1.9 billion of debt. So that means that Citi is willing to lose at least $200 million on the deal. And while that’s a lot of money for you and me, it’s a lot less than Terra Firma lost.
So what’s next? Insiders are speculating that Blavatnik and EMI will go back to the bargaining table. Also, there’s still a distinct possibility that EMI will be sold off in pieces. BMG Rights Management Group GmbH is the frontrunner for EMI’s more lucrative publishing business, apparently. Either way, it doesn’t look like Citi wants to hold on to the label for much longer, so look for it to change hands soon.
EMI’s labels include Capitol and Virgin, while they distribute labels including Century Media, Nuclear Blast, Earache, and Candlelight.
