Updated: Layoffs, New Appointments at Universal-EMI Canada
Updated: Layoffs, New Appointments at Universal-EMI Canada

As of late Friday afternoon (ET), the Universal Music Group's remedies package of assets to be divested as part of its effort to win regulatory approval of its proposed acquisition of still had not been formally submitted to the EU Commission, according to sources.

With UMG still negotiating with the EU over which assets will be in the package, the industry may have to wait until early next week to learn what will be included.

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On Friday evening, UMG was supposedly negotiating a package that would include divesting assets that generate about 200 million-300 million euros. Among the assets mentioned for possible inclusion are Virgin Records, Chyrsalis U.K., EMI Classics, Virgin Classics, Mute, Jazzland, Sanctuary and Ensign, according to press reports.

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While the EU had asked UMG to have its package ready by July 18, sources now claim that was an informal deadline and the formal one is Aug. 1. But getting the package in sooner will allow the EU time to market test it and reach a decision sooner, which would benefit UMG.

On the other hand, one of the pressures hanging over the deal for UMG has gone away: When UMG missed the informal July 18 deadline, some music industry executives said that triggered a 15-to-21-day extension to the Sept. 6 deadline, by which time the EU was expected to make a decision.

If that extension, which others say is at the discretion of the EU, had been extended, UMG -- which agreed to take on regulatory risk -- may have been put in the position of having to pay $1.9 billion to Citigroup for EMI without knowing the EU's decision on whether it had approved the deal or not. But sources say that Citigroup is behind schedule in getting the paperwork together to move the pension-fund liabilities out of EMI, so the payment date has been postponed until November.

When Citigroup initially was shopping EMI, it insisted that the buyers assume the pension-fund liabilities and regulatory risk. In the final compromise to get the deal done, Citigroup agreed to take over the pension fund liabilities, while UMG agreed to the regulatory risk, which means that even if the deal is not approved by the EU, Universal will have to pay anyway. And then when EMI was sold to another suitor, UMG would get whatever amount the sale brought -- which means it would be at risk of losing some money if the second suitor doesn't pay as much as UMG.

While some sources say that UMG is still trying to woo IMPALA to change their opposition against its play for EMI, other sources say that UMG won't go back to IMPALA until the remedies package is done. As reported earlier this week, UMG offered to provide financing options for independent labels that want to purchase any UMG/EMI assets to be divested, as well as creating a 25 million euros innovation and cultural fund for the trade group, according to press reports.

IMPALA members are divided on UMG's offer, as reflected in quotes in the New York Times and Financial Times, which see Beggars Group's Martin Mills -- who testified strenuously against the deal during a U.S. Senate hearing last month -- remaining opposed to the deal but Domino head Laurence Bell and PIAS' Kenny Gates having favorable reactions.

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In any event, the final remedies package is now expected to be completed by Monday so that the EU can begin market testing whether the divested assets are enough quell competitor concerns about the merger.

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