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EMI Makes Music With Terra Firma
by Megan Barnett
May 21 2007
May 21 2007
Terra Firma plans to buy EMI Group, the third-largest music label, for $4.7 billion.
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Summary:
A music content company which is composed of two businesses: Recorded Music and Music Publishing. View More
The private equity firm Terra Firma Capital Partners has emerged the victor in the bidding war for the U.K.-based record label EMI Group. EMI, the label for bands including the Beatles, Coldplay, and the Rolling Stones, is valued at $4.7 billion under the terms of the deal.
At least three private equity firms in the U.S. had expressed interest in buying EMI, but Terra Firma, a British company headed by Guy Hands, made the winning 11th-hour bid Monday morning of 265 pence per share. The private equity firms Cerberus, One Equity Partners, and Fortress Investments had all submitted lower bids after reviewing EMI's books, the Sunday Times of London reports.
But EMI's acceptance of Terra Firma's bid does not preclude more offers from coming in. EMI shares, which trade on the London exchange, rose to 271 pence per share on the news, indicating that investors may still be holding out for a higher offer. According to the London Times, EMI has set May 23 as the final deadline for offers.
Terra Firma's all-cash bid is particularly appealing to EMI shareholders. "Terra Firma's offer is the most attractive proposal received. It delivers cash now, without regulatory uncertainty and with the minimum of operational risk to the company," EMI chairman John Gildersleeve said in a statement.
The deal is a blow to
Warner Music, which had been trying to broker a merger with EMI, notes the Financial Times. In the last year, EMI rejected at least two offers by Warner Music after the two companies failed to agree on price or management control. A merger of the two firms would also involve regulatory hurdles.
EMI Group also announced today that its revenue for the year ended in March fell by 16 percent. Many record labels, including EMI, are struggling to offset a decline in CD sales with other revenue streams.
At least three private equity firms in the U.S. had expressed interest in buying EMI, but Terra Firma, a British company headed by Guy Hands, made the winning 11th-hour bid Monday morning of 265 pence per share. The private equity firms Cerberus, One Equity Partners, and Fortress Investments had all submitted lower bids after reviewing EMI's books, the Sunday Times of London reports.
But EMI's acceptance of Terra Firma's bid does not preclude more offers from coming in. EMI shares, which trade on the London exchange, rose to 271 pence per share on the news, indicating that investors may still be holding out for a higher offer. According to the London Times, EMI has set May 23 as the final deadline for offers.
Terra Firma's all-cash bid is particularly appealing to EMI shareholders. "Terra Firma's offer is the most attractive proposal received. It delivers cash now, without regulatory uncertainty and with the minimum of operational risk to the company," EMI chairman John Gildersleeve said in a statement.
The deal is a blow to
Warner Music, which had been trying to broker a merger with EMI, notes the Financial Times. In the last year, EMI rejected at least two offers by Warner Music after the two companies failed to agree on price or management control. A merger of the two firms would also involve regulatory hurdles.EMI Group also announced today that its revenue for the year ended in March fell by 16 percent. Many record labels, including EMI, are struggling to offset a decline in CD sales with other revenue streams.
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