Buy-out specialist Ronald Perelman has emerged as a leading contender, alongside Warner Music, Vivendi-owned Universal Music, BMG and Sony/ATV, which are all expected to table bids for all or part of the firm.
Warner and Universal Music are thought to be most interested in the recorded music arm of the business, while BMG and Sony/ATV, the firm half owned by the Michael Jackson Family Trust, are keen on the music publishing unit.
Perelman’s Macandrews & Forbes is thought to prize the recorded music business most highly.
The possibility of a bidding war will come as a relief to Citigroup, which has seen a number of private equity firms back away from the process.
Terra Firma, the private equity firm owned by Guy Hands, lost control of the asset it bought for £4.2bn in 2007 after Citigroup decided its outstanding debts were unsustainably large. The bank, which provided £3.4bn of debt to the company, is likely to see combined bids of between £3-4bn for the two sides of the business, with the publishing arm seen as the most valuable.