EMI, the UK music company, has announced its intention to sell its recorded music division to Universal Music for US $1.9 billion.
Sources indicate that the other segment of EMI’s operations – its profitable music publishing division – is likely to be sold to a Sony-led consortium for upwards of US $3 billion.
Founded in 1897, EMI boasts a roster of artists that includes Coldplay, the Beatles, and Pink Floyd.
Citigroup took control of EMI in February following the failure of prior owner Terra Firma to pass a solvency assessment.
“I particularly welcome the fact that EMI will once again be owned by people who really do have music in their blood,” remarked Sir Mick Jagger, the Rolling Stones frontman.
The manager of Coldplay expressed his enthusiasm for Universal as well.
“They have gathered the most skilled team of executives in the industry today, and their success is evident,” said Dave Holmes.
Universal Music operates as a division of the French media conglomerate Vivendi.
Included in EMI’s label roster are Blue Note, Capitol, Parlophone, and Virgin Records.
Under Universal’s banner, you can find labels such as Def Jam, Motown, Decca, Island Records, Interscope Records, and Polydor Records.
“As an Englishman, EMI represented the foremost music company during my formative years,” stated Lucian Grainge, chairman and CEO of Universal Music. “The artists and their music formed the backdrop of my adolescent life.”
He further expressed, “Universal Music Group is dedicated to both upholding EMI’s cultural heritage and artistic diversity while also investing in its artists and staff to enhance the company’s assets for future growth.”
In June, EMI announced plans to embark on a strategic review regarding the company’s future, which could lead to a sale, share offering, or a financial restructuring.
In 2007, private equity firm Terra Firma, led by Guy Hands, acquired EMI for $5 billion just prior to the onset of the credit crisis that destabilized global financial markets.
The firm later acknowledged that it had overvalued EMI and faced difficulties fulfilling obligations on the $3.2 billion borrowed from Citigroup to finance the acquisition.
Last year, Terra Firma sued Citigroup in the United States, claiming the bank had deceived it into paying an inflated price for EMI. The lawsuit ended unfavorably for Terra Firma, with a jury siding with Citigroup.
