EMI Group sold in units

By Justin Chan,

Citigroup Inc. has agreed to sell EMI Group in separate transactions for $4.1 billion.

Business Week reports that Vivendi SA's Universal Music Group has agreed to pay $1.9 billion for EMI Group's music operations, which are responsible for managing artists like Katy Perry and Coldplay. A group headed by Sony Corp. will pay the remaining $2.2 billion for the group's publishing services.

The deal marks a tumultuous point in EMI's 114-year-old history. The deal came after investor Guy Hands failed to comply with loan convents. Citigroup seized EMI in February.

"The two companies coming in to buy the asset know the music industry well; they’re not going to have any false pretenses about what will or won’t happen,” said Ben Rumley, an analyst at Enders Analysis. "We might be getting close to the point where the decline, in the recorded side at least, is ending.”

Warner Music Group had previously offered to pay between $1.5 billion and $1.6 billion for EMI's recording unit. BMG Rights Management GmbH had offered between $1.8 billion and $2 billion for the publishing unit.

As the Wall Street Journal reports, one of the major problems in the deal was the status of EMI's 22,000 pensioners. Universal was unwilling to accept the liability, so Citigroup conceded and decided to keep it.

Vivendi has also reportedly decided to take on a regulatory risk, meaning that it will be forced to find another buyer if antitrust authorities decide to block the deal.

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