UMG guarantees Citi EMI $1.9bn price tag even if regulators block deal

UMG has guaranteed Citigroup the $1.9 billion price tag for EMI Music, even if regulators stop the company’s acquisition from happening altogether.

That’s according to The New York Post, which says that, if Citi is forced to sell EMI Music to another party because the proposed deal with Universal falls through, UMG will make up the difference if a new deal brought a lower price.

Such a provision would suggest a great degree of confidence on UMG’s part that the deal with Citigroup will be completed but, as The Post points out, it is already facing stiff opposition from sectors of the music industry.

US regulators have started talks with interested parties about the deal. Helen Smith, executive chairman of Impala, a Brussels-based association representing independents, told The Post, “We think it’s unlikely, that the regulatory authorities can justify taking a decision other than an outright no.”

At the time the deal was struck, Beggars Group’s Martin Mills spoke to Music Week and labeled the move ‘corporate arrogance,’ saying it is “bad news for everyone in the art and business of music,” a sentiment he repeated to the MPG Awards last Thursday after picking up the Outstanding Contribution to Music Award.

Universal, which sees $158 million in synergistic savings, has agreed to sell $657 million in non-core assets to gain antitrust approval for the EMI deal.