❚ AN INTERNAL STAFF MEMO from EMI chief executive Roger Faxon confirms that the historic record label of the Beatles, Pink Floyd and Queen is up for sale. Last Tuesday ownership of EMI, Britain’s oldest record company, passed to Citigroup, the US banking giant, after 114 years of British ownership. The takeover ended speculation that has marred the label’s future ever since 2007 when Guy Hands and his Terra Firma private equity firm bought the British music major for £4.2bn, widely believed to be a massive overpayment. Terra Firma was unable to keep up interest payments on the loans.
In the note sent to music staff last Tuesday, and published today by Guardian online, Faxon confirmed that “there is no doubt that in due course EMI will be up for sale – just like it has been from the day Terra Firma bought it.” But he emphasised: “Regardless of the country of origin of our owner, EMI remains a British company – both legally and spiritually.” Faxon insists that “EMI itself was never in administration”.
“The takeover in 2007 of EMI by Guy Hands’s Terra Firma — just as the bubble in financial markets was going pop — will go down in British corporate history as one of the worst ever deals”
— Robert Peston, Business editor, BBC News
Further analysis in today’s Guardian by Dan Sabbagh, head of media, is headlined: Is the music company going to go for a song? He writes: “Hands’s instincts at EMI often failed to serve him and the business well. Three-and-a-half years later, after an overambitious acquisition that left the company unable to handle £3bn of debt Hands had taken on, the barbarian at the gates was forced out by his bankers Citigroup.
“Now that Citigroup has written off £2.2bn of loans, EMI, with a manageable £1.2bn debt load, is likely to be sold within months. Out of politeness, Citigroup sources prefer to say predictably that the process is ‘not a fire sale’ and that it is possible – if unlikely – that it will be theirs in a year’s time. The rhetoric is only there to protect the bank in case something goes awry again with a company that counts Katy Perry, Swedish House Mafia and Tinie Tempah among its latter-day artists.”
Warners and BMG are tipped as potential purchasers of EMI.