Terra Firma's failed investment in EMI has set in motion a series of events that could lead to major changes in the music industry. Numerous and rather speculative media reports are detailing the steps being taken by Warner Music Group, BMG Rights Management and numerous private equity firms to acquire and sell assets. These reports come after Citigroup took over EMI from private equity owner Terra Firma, effectively putting EMI on the market.
There are many questions surrounding the scenarios presented in these reports. Will EMI be split in two? Will Warner Music Group sell one division in order to augment its other division? What are Universal and Sony planning? How many bidders are out there? Who can pay the most? And would a deal get past antitrust regulators? Here's the latest.
Warner Taking Bids
The Financial Times has reported that Warner Music Group has asked for preliminary bids for one or both of its divisions. Current Warner shareholder Len Blavatnik, who owns about 2% of the company's shares, is said to be interested mainly in the Warner/Chappell publishing division.
Warner Seeking EMI Acquisition
Warner Music Group is said to have asked Goldman Sachs to consider whether it could buy EMI, according to the Daily Mail. One possible way to acquire EMI's recorded music division is through the sale of Warner/Chappell. Under that scenario, Citigroup, which now controls EMI, would sell EMI's publishing division to another company.
( Daily Mail)
BMG Lines Up Bank for Warner Music Bid
Sky News in the U.K. is reporting that BMG Rights Management, Bertelsmann's joint venture with private equity firm KKR, has hired Deutsche Bank and JP Morgan to advise on and finance an offer for Warner/Chappell, Warner Music Group's publishing division. Although BMG Rights CEO Hartwig Masuch has expressed interest in recorded music assets, such a bid would fall in line with the company's other acquisitions. In 2010 alone BMG Rights acquired Chrysalis, Stage 3, Cherry Lane and Evergreen.
20 Companies Readying a Bid for Warner Music Group
According to the Daily Mail, 20 companies are set to put in preliminary bids on Warner Music Group. It is widely believed that BMG Rights and other private equity groups are interested in one or more divisions. The best bids are likely to come from BMG Rights, Sony Music and Universal Music Group because their existing publishing divisions allow them to extract the most value from an acquisition by increasing scale and reducing redundant expenses.
EMI Boss Roger Faxon Says Company Worth Most When Whole
As word of possible deals spread, Faxon told The Telegraph he believes a whole EMI is more valuable than a halved EMI. "If the businesses were broken apart, I think they would be far weaker than in combination. There may be other answers that other people have in how to gain value at the business, but I don't see them."