Universal / BMG Music tie up approved by European Regulators as Warners look at EMI

June 2007

Music publishing, Record labels

Vivendi/Universal and BMG Music Publishing have finally had their merger given the green light by the European Commission. The E1.63B merger was approved on the grounds that Rondor UKZomba UKBBC Music and 19 Music were excluded from the merger. Immediately after the announcement, independent labels association Impala was quick to point out that it reserves the right to seek a reversal of the decision, and said it will follow the merger with great interest – no doubt Warners, who are hovering over EMI, will do the same! The ECsaid in a statement “The proposed merger, as initially notified, raised serious doubts as regards adverse effects on competition in the market for music publishing rights for online applications. However, the Commission’s investigation found that these concerns would be removed by the remedies package proposed by the parties concerning the divestiture of a number of publishing catalogues”. In fact EMI Group has agreed to an offer by private equity firm Terra Firma for £2.4B, subject to approval by the firm’s shareholders. The board of directors at EMI intend to recommend unanimously that EMI shareholders should accept the offer. EMI’s shares jumped 10% on the news – the offer vaues the company at 265p per share. EMI also announced year end figures for 2006 showing revenues down and a profit of £118.1 million in 2005 turned into a loss of £263.6 for 2006. Revenues were £1.75B in ‘challenging’ global market place. Despite this EMI’s shares jumped to above the Terra Firma bid price to 271p as speculators waited to see if a bidding war started.

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