Another Bidder Emerges For EMI
May 23, 2007 at 5:43 AM (PT)
It took EMI GROUP seven years to finally reach a buyout deal, but it took only 24 hours for another bidder to emerge, writes PETER LAURIA and ZACHERY KOUWE in THE NEW YORK POST.
At around 12:30p yesterday -- exactly 24 hours after EMI agreed to be acquired by TERRA FIRMA CAPITAL PARTNERS for 265 pence per share -- private-equity firm CORVUS CAPITAL and former EMI Chief Executive JIM FIFIELD were in the final stages of preparing a bid of 278 pence per share for the entire company, according to three sources with knowledge of the offer.
They want to use the existing acts on the recorded music side almost like a publishing company. Their plan is to have little in the way of new music.
At 278 pence, CORVUS' bid is not only higher than TERRA FIRMA's, but also significantly higher than what any other private-equity firm had offered during the months-long auction process. EMI's board will now have to consider the offer from CORVUS or risk being sued by shareholders who may claim the deal with TERRA FIRMA undervalues their shares. The board appears to have anticipated the emergence of a rival offer and left the door open with a modest break-up fee of only $47.3 million. WARNER MUSIC executives are still considering whether to bid for EMI or wait to see how the current deal with TERRA FIRMA plays out, according to sources close to the company.
"They want to use the existing acts on the recorded music side almost like a publishing company," said one source. "Their plan is to have little in the way of new music." Or, to put it another way, CORVUS is essentially planning to slash and burn its way through EMI's 6,500-person staff, cutting thousands of jobs in A&R, promotion, marketing and back-office operations.
But that fact may work against CORVUS despite its higher offer. Sources said EMI chose TERRA FIRMA over WARNER MUSIC, aside from regulatory obstacles, because the firm wasn't working with a management team and would keep EMI's in place.
FIFIELD assumed the CEO post at EMI in 1989 and worked closely on the publishing side with industry heavyweight CHARLES KOPPLEMAN. The two have remained friends over the years, and given KOPPLEMAN's interest in acquiring publishing assets, sources speculated he could play a role in the CORVUS bid.