EU OKS Universal’s $1.9B bid for EMI library
BRUSSELS – Vivendi’s Universal Music Group won European and U.S. regulatory approval on Friday for its $1.9-billion purchase of EMI’s recorded music business, with the EU requiring Universal to sell labels that account for about a third of the British company’s revenues.
The U.S. Federal Trade Commission approved the transaction without conditions. With the regulatory approvals, the companies are now free to close the deal.
Universal said on Friday it would sell some of EMI’s most prized assets, such as the Parlophone label — home to star acts like Coldplay and Queen — in a move which some analysts said significantly reduced the attractiveness of the deal.
“The whole point of the deal was the back catalogue and getting EMI’s artists. But when you look at the bands they had to give away, they are some of their best ones,” said Conor O’Shea, analyst at Kepler Capital Markets.
Nonetheless, the deal cements Universal’s No. 1 position in the European music industry, with a vast library of current top-selling and legendary names including Jay-Z, Kanye West, Katy Perry, Robbie Williams, Pink Floyd and The Beatles.
“We are delighted Universal Music will retain over two-thirds of EMI on a global basis, contributing to the accretive nature of the deal,” the company said in a statement following the European approval.
Some analysts said the sale of assets equivalent to around 30 per cent of EMI’s group revenues, or roughly 10 per cent of sales for the combined group, could raise as much as $750 million and help Vivendi reduce its debt pile.
However, a source close to the deal put the value of the assets to be divested at about $350 million. The source did not want to be named to protect a business relationship.
The European Commission, which had raised concerns over the potential market power of the combined group, said the disposals would have to be completed in six months.
Universal is buying EMI Recorded Music, while Sony snapped up EMI Music Publishing, the portion that handles copyrights to 1.3 million songs, for $2.2 billion.