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EMI backs Terra Firma bid

Board recommends shareholders to accept

LONDON — EMI’s search for a buyer may be over.

Its board of directors recommended Monday that shareholders accept a £2.4 billion ($4.7 billion) cash bid by private equity company Terra Firma Capital Partners.

Terra Firma has set up Maltby Limited for the purpose of making the 265 pence ($5.22) per share offer for EMI. Including the assumption of the music group’s debt, Maltby’s offer values EMI at $6.3 billion.

In a joint statement, the companies revealed that the EMI board intends to recommend unanimously that its shareholders accept the offer, noting that the directors have already undertaken to sell their own holdings to Maltby.

Terra Firma CEO Guy Hands said: “Terra Firma’s objective is to build on EMI’s current position as one of the world’s leading music companies and accelerate the development of its digital and online strategy to fully exploit this long-term growth opportunity.”

Details of the proposed offer will be sent to shareholders soon, and if Maltby is successful in its takeover, it will initiate discussions with senior EMI management regarding their continuing involvement in the business.

EMI chairman John Gildersleeve said, “The global music industry is undergoing significant change and, whilst EMI is confident in its ability to deliver its recently announced restructuring plans, significant uncertainty exists as to the timing and extent of future market developments.”

Gildersleeve revealed that there had been a number of proposals “from several different parties” for EMI Group, but added: “Terra Firma’s offer is the most attractive proposal received and delivers cash now, without regulatory uncertainty and with the minimum of operational risk to the company.”

EMI also announced its results for the year ended March 31, which saw revenues fall 15.8% to $3.46 billion, while pre-tax profits slumped to $520.7 million.

EMI’s shares closed above the $5.22 level of Terra Firma’s offer at $5.34, leaving some observers to wonder whether the stock market expects another interested party, perhaps Warner Music, to make an improved offer.

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