EMI price could fall as books open

HIGH valuations touted for music group EMI are likely to come down after the company opens its books to bidders over the coming weeks, industry sources said yesterday.

Up to ten interested parties have submitted first-round bids for EMI, home to artists such as Coldplay and Kylie Minogue, with some valuations reported as topping $4bn (£2.4bn).

But the iconic UK music publisher is more likely to attract a final price in line with the $3.3bn paid for its rival Warner Music, when it was bought by billionaire Len Blavatnik in May, industry sceptics said.

“Whatever valuations are being bandied around will come down to earth,” one source told City A.M. “Conservatively, the companies are worth about the same.”

Frontrunners among the bidders are music giants Warner, Sony, Universal Music and BMG, the joint venture between private equity firm KKR and German group Bertelsmann.

But Universal – already the world’s biggest music company – and fellow giant Sony face regulatory obstacles to buying EMI whole and may try to take parts such as its back catalogue.

Second round bidding is expected to start in September, with parties conducting due diligence until then.

Rating agency Fitch has estimated EMI’s value at $2–2.8bn, which would leave its owner Citi nursing a loss on the £3.4bn it has sunk into the group since 2007.