The Economy Is Holding Down Bids For EMI
October 17, 2011 at 3:43 AM (PT)
Last week, (NET NEWS 10/13), ALL ACCESS reported the sour economy's tight credit markets could prevent CITIGROUP INC. from selling EMI GROUP at a price it desires. Reports indicated that the corporation may receive lower bids, which may prompt it to break up the conglomerate to sell in pieces.
THE NEW YORK TIMES confirms that, reporting "turmoil in the financial markets has driven away many potential buyers and reduced the number of banks willing to finance bids. And according to several people involved with the auction, bidding prices have been lower than expected."
Last week, BMG-KKR and SONY gad reportedly submitted the top two offers for EMI PUBLISHING, while insiders told REUTERS that "VIVENDI SA'S UNIVERSAL MUSIC GROUP and LEN BLAVATNIK's WARNER MUSIC GROUP are vying for the recorded music side of EMI."
THE TIMES puts some numbers to those bids, writing, "of the five parties that have bid on all or parts of EMI, four are other big music companies. WARNER -- whose new owner is the Russian-born investor LEN BLAVATNIK -- and THE UNIVERSAL MUSIC GROUP have made offers for EMI's recorded music division, along with MACANDREWS & FORBES, the holding company controlled by RONALD PERELMAN. Those bids are said to be from $1 billion to $1.3 billion, according to these people, who spoke on the condition of anonymity because they had signed confidentiality agreements."
As for the publishing side, THE TIMES notes the "unit has drawn offers of $1.75 billion to $2 billion from SONY and BMG RIGHTS MANAGEMENT, a joint venture between KOHLBERG KRAVIS & ROBERTS and the German media giant BERTELSMANN. In addition, some of these companies have made offers for the entire company, but those bids are said to be lower than what CITI would get by splitting the company up."
"The global economy is in a different place than it was in FEBRUARY or MARCH, when the WARNER auction began, said LONDON-based ENDERS ANALYSIS Media Analyst BEN RUMLEY. "Everything you read in the news indicates that it is difficult to raise financing for any business, let alone music. It’s not the greatest time to be looking for debt financing."