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THE DEAL: Sony consortium buys EMI Music Publishing

Date: 14-Nov-2011

By Laura Board

A Sony Corp. consortium Monday, Nov, 14, struck a $2.2 billion deal for the music publishing business of EMI Group Ltd., bringing to an end Citigroup Inc.'s auction of the record label.

The Japanese electronics and media group has teamed with the estate of Michael Jackson, Abu Dhabi's Mubadala Development Co. PJSC, Jynwel Capital Ltd., Blackstone Group's GSO Capital Partners LP, and David Geffen to buy the asset three days after Citigroup agreed to sell EMI's recorded music division to Vivendi SA's Universal Music Group for £1.2 billion ($1.9 billion).

The price of the two assets together exceeds the $3 billion to $3.5 billion in proceeds Citigroup had anticipated when it announced in June that it would consider bids for the London-based music company. Citigroup seized EMI in February after Guy Hands' Terra Firma Capital Partners Ltd. defaulted on loans.

EMI Music Publishing has over 1.3 million music copyrights including works from contemporary stars Beyoncé, Jay-Z, and Rihanna and 1960s Motown classics. New York-based Sony Corporation of America through the Sony/ATV Music Publishing joint venture which Sony forged in 1995 with trusts formed Michael Jackson, will run the business for the consortium.

Both EMI sales are contingent on regulatory approvals. Universal Music Group is already the leading recorded music label, with a 28.&% share, according to Music & Copyright, and will increase this to 38.9% if the purchase proceeds. The EMI Music Publishing acquisition will make Sony the No. 1 in that market by adding EMI's 19.7% market share to the 12.5% that fourth-ranked Sony commands at present.

Brussels-based trade group Impala, which represents 4,000 of music's non-major labels, had already expressed its opposition to deals with both buyers.

Citi Global Banking advised Citigroup and EMI, whose law frrms were Clifford Chance LLP, Shearman & Sterling LLP and Freshfields Bruckhaus Deringer LLP. The Raine Group, Peter J. Solomon Company, UBS Investment Bank, and Guggenheim Securities, LLC advised the buying consortium. UBS Investment Bank arranged senior credit facilities. Dewey & LeBoeuf LLP was legal counsel to the consortium. A Weil, Gotshal & Manges LLP team including Michael Francies in London and William Gutowitz and Daniel Dokos in New York advised Mubdala.

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