Rivals aiming to hit the right note in auction for music label and publisher EMI

By Rupert Steiner for the Daily Mail
Updated: 17:08 EDT, 3 October 2011

It's the music industry’s very own version of The X Factor.

Four rival firms have lined up for a final sing-off to clinch EMI, the music label and publisher behind the Beatles and Coldplay, pictured below.

EMI was put up for auction earlier this year when Citigroup snatched control from private equity baron Guy Hands.

The tycoon had borrowed £3.2bn to fund his ill-fated acquisition but came close to breaching key terms of some of its loans, so Citi placed the historic group on the block in a bid to recoup some of its funds.

Now four of the world’s biggest music groups are expected to place second round bids by the middle of this week.

They hope to snap up EMI’s recorded music business, which puts out albums  and singles, and are also interested in its more lucrative publishing rights side which harvests fees from tracks used on the radio, movies and other platforms.

The former is valued at around £1bn, while the latter has a £1.61bn price tag.

The suitors are Warner, which was sold earlier this year to Russian oligarch Len  Blavatnik’s Access Industries, and BMG, the publisher that is owned by private equity firm KKR and Bertelsmann.

French-controlled Vivendi, through its Universal Music division, is in the running and billionaire investor and Revlon cosmetics owner Ronald Perelman is a surprise contender.

He, through his MacAndrews & Forbes investment firm, had teamed up with Sony in the race for Warner, but it is unclear whether the pair will form a duet for this competition.

Most suitors are expected to be keen to snap up both parts of the business while Perelman is most interested in recorded music.

Citi has not ruled out breaking up EMI and selling its highly profitable music publishing division if it received knock-out bids. The music industry believes regulators will allow consolidation because recorded music sales have shrunk by half over the last decade.

Hand’s Terra Firma fund bought EMI for £4.2bn at the height of the buy-out boom, but was forced to relinquish control after investors tired of pouring money into the label.

Last month Hands stepped up his legal pursuit of Citigroup over his disastrous investment in EMI.

Terra Firma applied to the High Court for valuations drawn up by accountants PwC, which Citi used to seize  control of the label.