Another rich old white man fails to purchase EMI from Citigroup

Another rich old white man fails to purchase EMI from Citigroup

After several days of private negotiations, word has emerged that the likely sale of EMI to Russian-born billionaire Len Blavatnik has fallen through. Inside sources are saying that the offer Blavatik put forward, somewhere between $1.5 and $1.6 billion, was well below the amount Citigroup (the current owner of EMI) had expected. While there’s still an opportunity for Blavatnik — who acquired Warner Music Group back in May for $3.3 billion — to raise additional funds and seal the deal, there are other concerns at hand.

EMI has a pension obligation of over $600 million, as well as property holdings that provide another $100 million in debt for the label. Much like the house cleaning that took place after British acquisition group Terra Firma took control of EMI four years ago, which ultimately led to Citigroup’s ownership of the company when they defaulted on their debts, whomever takes possession of EMI next will need to cut costs and potentially lay off 10% of the EMI workforce to make the company profitable. And then there’s the whole “how do you make money off music” thing….

Prior to Blavatnik, EMI had been in talks with several other pasty white men, including business magnate Ron Perelman and Luciean Grainge of Universal Music Group, but both deals fell to the wayside when the Russian tycoon entered the scene. If Blavatnik were to succeed in acquiring EMI, it would create a third mega-label to rival Sony and Universal, both of whom have seen considerable consolidations with smaller labels over the years in the wake of this thing they refer to as the “internet” and its troublesome tendency to make folks not want to pay $20 for a Katy Perry CD.

• EMI: http://www.emimusic.com

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