European Union Approves Universal Music's EMI Deal With Asset Sales Requirement
LONDON - European Union regulators on Friday formally approved Universal Music Group's $1.9 billion acquisition of the recorded music unit of EMI Group with conditions designed to limit the combined company's market power in Europe.
Under concessions negotiated by UMG management and corporate parent Vivendi with regulators, the music major must sell businesses contributing 60 percent of EMI's revenue in Europe, or around €350 million ($457 million).
The assets that will be divested represent 30 percent of EMI’s global revenue and only 10 percent of the companies' combined revenue.
It was already known that the company would sell the Parlophone label, which includes the likes of Coldplay, and smaller EMI labels, such as Ensign, Mute, Virgin Classics and Chrysalis. The merged firm will have to let go of Kylie Minogue and David Bowie. But the Beatles catalog is excluded from the sales concessions, and the combined firm will also continue to own Virgin UK, which was at one point rumored to be in play.
The European Commission and Vivendi and UMG executives have spent the summer months hammering out concessions acceptable to both sides, with some analysts having suggested that they may limit the financial benefits of the deal.
Sources familiar with Vivendi's thinking said that the final terms of the acquisition mean the deal will be financially accretive for the company.
UMG has said it plans to reinvest some of the money raised from the asset sales into the artists and operations of EMI and attract new and fresh artistic talent. It also wants to better utilize the back catalog for global audiences.
In the U.S., a decision on the deal by the Federal Trade Commission is expected soon. Most observers expect it to give the green light.
Earlier this month, Vivendi paid most of the price tag to current EMI owner Citigroup as was required under their acquisition agreement.
“Universal Music Group is delighted to have received regulatory clearance from the European Commission for its acquisition of EMI Recorded Music," the company said in a statement. "Today’s approval brings to an end an extensive EU regulatory review and the acquisition will benefit the artistic community and music industry."
Added the music major: "We are delighted Universal Music will retain over two-thirds of EMI on a global basis, contributing to the accretive nature of the deal. With a broad array of EMI artists from Katy Perry, Emeli Sande, Robbie Williams, Herbert Gronemeyer, Lady Antebellum and Norah Jones, to icons like The Beatles, the Beach Boys, Genesis and Bob Seger, we remain true to our vision: to invest in talent and grow the company to offer consumers more music and more choice, while furthering our support for new digital services and entrepreneurs."