Vivendi SA (VIV)’s Universal Music Group, seeking permission by regulators to buy EMI Group’s recorded- music unit, got the backing of European Union competition commissioner Joaquin Almunia for its proposed remedies, a person familiar with the matter said.
Following Almunia’s recommendation, the proposals now head to national regulators for a vote tomorrow, the person said, declining to be identified because the talks are private.
Universal, the record label of Lady Gaga and U2, is now offering to sell global rights to music companies Parlophone, Chrysalis and Sanctuary in addition to other concessions already offered in July, the person said. The extra remedies may bring the total value of disposals to as much as 350 million euros ($442 million) from an initial estimate of 300 million euros, the person said.
Universal, which agreed to buy the EMI assets from Citigroup Inc. (C:US) last year for 1.2 billion pounds ($1.9 billion), initially offered to divest 60 percent of EMI’s European assets. More disposals make the iconic London-based label less attractive for Paris-based Vivendi, saddled with debt and under investor pressure to improve earnings, as it faces a deadline this month to pay for EMI.
Representatives for Universal and the European Commission declined to comment.
The offer was revised to include some global rights and new territories based on opinions by third-party peers and EU concerns that the EMI takeover would remove a key rival and block potentially anti-competitive deals.
Should national regulators approve the package this week, the European Commission could rule on the purchase as soon as Sept. 19, several people familiar with the matter said last week.
Citigroup agreed in November to sell EMI’s recorded music and publishing business in separate transactions for a combined $4.1 billion. Universal Music agreed to buy EMI’s recorded division while a Sony Corp.-led group agreed $2.2 billion for publishing.
Citigroup seized EMI from Guy Hands’s private equity firm, Terra Firma Partners Limited, in February 2011 after it failed to meet loan terms. Hands bought EMI in 2007.
Under Hands, who cut jobs and reorganized the business, acts including the Rolling Stones, Paul McCartney, Queen and Radiohead left the label.
EMI’s recorded business, which houses the Beatles and artists including Coldplay, Katy Perry and David Guetta, saw its headcount drop by 34 percent in recent years, artists and repertoire spending was cut by more than half and the roster of artists fell by 44 percent, according to internal documents of the label obtained by Bloomberg.
While regulators can block deals, companies usually try to eliminate such concerns by offering to sell units or promise to change business behavior.
Universal would be “almost twice the size of the next largest player” in Europe, the EU said in March when it started an in-depth probe into the EMI deal.
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