EMI Board Accepts Terra Firma Buyout Offer
May 21, 2007 at 9:33 AM (PT)
The Board of Directors of MALTBY and Directors of EMI have announced the terms of a recommended cash offer for EMI at a price of 265 pence in cash for each EMI share, valuing EMI on an enterprise value basis at approximately £3.2 billion and valuing the entire issued and to-be-issued share capital of EMI at approximately £2.4 billion. MALTBY is a newly incorporated company formed at the direction of BRITISH private-equity house TERRA FIRMA for the purpose of making the offer.
"TERRA FIRMA's objective is to build on EMI's current position as one of the world's leading music companies and accelerate the development of its digital and online strategy to fully exploit this long-term growth opportunity," said TERRA FIRMA CEO GUY HANDS.
EMI Chairman JOHN GILDERSLEEVE said the company received "several" proposals, but that the TERRA FIRMA offer delivers cash now without regulatory uncertainty.
Terra Firma's objective is to build on EMI's current position as one of the world's leading music companies and accelerate the development of its digital and online strategy to fully exploit this long-term growth opportunity.
REUTERS reports TERRA FIRMA plans to keep the company together, retain existing management and proceed with plans to securitize the company's music publishing assets, a source familiar with the deal said today. It had been widely believed that a private equity buyer might only keep the cash-generative music publishing arm and sell the struggling recorded music division to WARNER MUSIC GROUP.
"TERRA FIRMA sees significant opportunity on both sides of the business," said the source, who requested anonymity. "It believes in the digital growth opportunity in the music market, in general, and so the expectation is that the business will be held together."
The price of 265 pence for each EMI share represents a premium of 13.2% to 234 pence, the average closing price per EMI share over the one month period ended on FEBRUARY 19, 2007, the business day prior to EMI’s announcement that it had received an approach from WARNER MUSIC GROUP, and a premium of 19.4% to 222 pence, the closing price per EMI share on FEBRUARY 19.
The Board of Directors of EMI intends to recommend unanimously that EMI shareholders should accept the offer, as the Directors have themselves irrevocably undertaken to do in respect of their own beneficial holdings. GREENHILL, CITI and DEUTSCHE BANK are acting as joint financial advisers to EMI. CITI and DEUTSCHE BANK have existing relationships with TERRA FIRMA, and therefore GREENHILL is acting as the adviser to EMI.