With the second-round bids for EMI now in (as of Oct. 5), it will take a few days for clarity about the situation to emerge, sources say. Of course, Citigroup and EMI know what they have in hand, but bidders and their consultants are unsure of where things stand. For instance, at the close of second-round bidding, it was unclear if any of the suitors bid on the entire company.
When EMI was first put up for sale, the Access Industries/Warner Music Group, Platinum Equity and the Gores Group, and Ron Burkle's Yucaipa, were thought to be the suitors that would make a play for the entire gambit. But as it turns out, Burkle never even put a bid in at all, according to sources, despite press reports to the contrary that he was teaming up with Napster's Sean Parker.
Meanwhile, in the days leading up to the second-round due date for bids, WMG was wrestling with whether it would place a bid for the entire company or just for the record label, sources say. Some suggest that Access ran into the same trouble that other suitors were having in nailing down financing, which may have caused it to scale back its appetite for the whole company. It couldn't be determined what kind of bid Access/WMG tendered at press time.
On the other hand, Ron Perelman's MacAndrews & Forbes -- which sources say started out bidding on the EMI recorded music operation, a strategy it stuck with during the WMG auction earlier this year -- may have been contemplating a bid for all of EMI. Late in the process, sources say, it suddenly sought more information on EMI's publishing operation.
The turbulent capital markets have supposedly chased away the other private equity bidders. Sources confirm that like Oaktree Capital Management and Apollo Global Management withdrew from the bidding process well before the second-round deadline. Unconfirmed press reports suggest that Platinum Equity and the Gores Group also went away, too.
While sources say some bidders are still trying to line up their financing, the Financial Times is reporting that Sony has secured its funding from Abu Dhabi's investment fund, Mubadala Development Co. Sony put a bid in for the EMI publishing operation, sources say. Likewise, they say BMG Rights Management has also bid on the EMI publishing asset as well, and likely has its financing together considering the company is a joint-venture between Bertelemann and Kohlberg Kravis Roberts. Finally, the Universal Music Group has put in a bid for EMI's recorded music operation, and it too is not expected to have trouble financing such a deal.
At press time, the only bid made for the entire company that could be confirmed came in the form of a press release from Yamani Global Equities, which said it was in partnership with Alliance Warburg Capital Management.
Since the bid was made without access to the financial data room that Citigroup and EMI made available to suitors, some viewed the bid as a publicity stunt. Yet Jim Caparro, who is described as the CEO of Yamini, is a credible executive with a distinguished career in the music industry, having served as the head of Polygram distribution arm. He was also chairman of Island Def Jam Music Group and president of WEA from 1990 through 2003.