Warner in $750m bid for EMI division
15 November 2010 3:25am
WARNER Brothers could be about to make a $750m (£465m) bid for troubled record label EMI’s recorded music division with the formal bid potentially being lodged with the record label’s owner, private equity group Terra Firma, within weeks, according to a report in a Sunday newspaper.
While Terra Firma boss Guy Hands has said he is not interested in a sale, he is understood to have come under pressure from US bank Citigroup to do a deal. Hands failed to win a court case last week in which he claimed Citi misled him into over-paying for the record label three years ago when it lent Terra Firma £2.8bn to complete the £4.6bn deal.
Ever since, Hands and Citi have been at odds, with the private equity firm repeatedly breaching banking covenants. Hands has previously been forced to ask his investors to provide additional funds to prevent Citi from seizing control and to some the lawsuit was the final throw of the dice in his continuing dispute with the bank.
Citi is said to support a sell-off of EMI’s recorded music division to Warner as part of a debt-reduction programme. EMI’s recording arm is home to artists including Robbie Williams, Katy Perry and Coldplay.
The bank could also offer to cancel debt in return for taking control of EMI’s music publishing arm, which is valued at more than $2bn. Hands would then be free to look at a merger of EMI’s and Warner’s recorded music divisions.
EMI has lost more than £2bn in the past two years, and its value has more than halved since 2007.
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