KKR and Warner Music run the rule over Guy Hands’ EMI

City A.M. Reporter
PRIVATE equity house KKR was named as a partner with Warner Music in a break-up bid for troubled record label EMI yesterday.

The two are reported to have been in talks for a fortnight over an approach for EMI, which is expected to be put up for sale by its buyout owner Terra Firma in the summer. Guy Hands, Terra Firma’s founder, is desperate to stop EMI falling into the hands of creditor Citigroup in June when it faces a covenant test.

KKR, one of the oldest private equity groups in the world and owner of Kodak and Toys ‘R’ Us, is said to be interested in EMI’s music publishing arm. KKR already has a publishing joint venture with German titan Bertelsmann.

Warner Music, which has long been rumoured to be interested in part of EMI, is reported to be looking at the label’s recorded music division which boasts the back catalogues of artists such as Coldplay and Robbie Williams.

Bankers are understood to have valued the music publishing business at £1.2bn, while the recorded music arm generated 55 per cent of EMI’s £293m earnings last year.

The news comes days after the shock departure of EMI chief executive Elio Leoni-Sceti.
EMI and KKR declined to comment.