EMI Group — the folks who have been kind enough to grace us with Coldplay, Norah Jones, and Lenny Kravitz (to be fair, they also brought us John Lennon, Radiohead, and Queen) — became an acquisition target last week for the likes of Fortress, Cerberus, and One Equity. After spurning Warner Music Group’s earlier offer of $4.1 billion, the music group apparently believes private equity can do better.
(In an amusing side note, EMI turned down Warner’s offer after Warner had rejected a $4.2 billion takeover bid from EMI. Ha ha ha ha!)
Since they can’t agree on acquiring each other, it’s hardly surprising that private equity is interested in the few major music labels still operating today. Let’s take a look-see, shall we?
Top-dog Universal Music Group is owned by French telecom behemoth Vivendi. Sony BMG (currently the #2 record label in the world) is a joint venture between Sony Corporation of America and media giant Bertelsmann (though a court decision could soon undo that scenario). And 35% of Warner Music Group is claimed by leveraged-buyout firm Thomas H. Lee Partners.
The firms now circling EMI are locked in a $5.9 billion battle for the label, one that should culminate on May 23, the formal offer deadline. What does EMI hope to get out of it? Much needed capital infused into its struggling CD sales segment. What would a buyer get? EMI’s lucrative music publishing business, which the company has considered securitizing in lieu of a buyer stepping in.
So, in light of the continued consolidation of the major label music biz, here’s the real question: What do music fans stand to gain? Anybody?
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