A Sony/ATV consortium has been given the go-ahead by the European commission to purchase EMI for $2.2 billion (£1.4 billion).
According to The Independent, insiders said that the EC would give formal agreement to the company today (April 19th).
The British record label, EMI, has been up for sale since CitiGroup took control of its assets for sale after EMI’s previous owner, Terra Firma, went bust. The label has been responsible for the likes of The Beatles, Katy Perry, Tinie Tempah, Pink, Coldplay and many more.
The Sony/ATV bid is in stark contrast to Vivendi-owned Universal’s bid earlier this year which amounted to $1.9 billion. Universal’s bid was forced to go through a lengthy—and costly—Phase II investigation. This announcement would mean that Sony/ATV would not be required to do the same.
According to The Independent, leaked documents from the Sony/ATV camp—which is a partnership between Sony and the company that owns Michael Jackson’s back catalogue—suggest that as much as 60 per cent of EMI’s 515 work force could face job loss. However, a spokesman informed the paper that any talk of job losses was “premature.”Article continues below
Universal’s bid slowed yet further in March with the European Commission looking to investigate into their proposals even further.
The EC were concerned that any Universal/EMI merger would end with Universal being twice the size of any of its rivals. Indeed, in November 2011 Universal announced it has a global market share of 26.5 per cent. If the merger got the go-ahead this—commentators suggested—would leave it with a global market share of 40 per cent and a market share of over 50 per cent in some European countries.
In order for Sony/ATV to be clear to purchase the British label they would be required to sell some of their smaller assets. According to the Financial Times, this would mean the sale of several music catalogues including Virgin Records in the US and in Europe and Famous Music in the UK (which represents songwriters such as Ozzy Osbourne, Culture Club and Tears for Fears).
The Sony/ATV deal still has to get regulatory approval in the US, Australia and Brazil. However, the EU approval has been seen as the clincher.
According to The Guardian, if the purchase does go ahead then it will give Sony/ATV a global market share of between 25 and 30 per cent.
Sony/ATV will hold 38 per cent of the venture with the rest being held by other members of the consortium which includes Mubadala Development Company, Blackstone Group, UBS, GSO Capital Partners and music executive David Geffen (who was also an investor in DreamWorks).