Branson starts talks with Universal Music on Virgin Records deal

(the Guardian) Mogul says label he founded has been 'mismanaged' over the past decade and is a 'sleeping beauty' that could be rejuvenated

Sir Richard Branson has opened talks with Universal Music in his bid to buy back Virgin Records, saying the label behind the Spice Girls had been "mismanaged" over the past decade.

Branson, speaking for the first time about his ambition to return to the business he started more than 40 years ago, said it was a "sleeping beauty" of an asset as he talked up his hopes for a deal.

He has spoken to Universal Music chief executive Lucian Grainge in the last 24 hours – although the last day has been a busy one for Branson who celebrated his 62nd birthday in the Caribbean.

Branson said that the label, which in its halcyon days released records by artists including the Sex Pistols, the Spice Girls and the Rolling Stones, has been "mismanaged in the last 10 years".

Virgin Records is on a list of labels that Universal is considering offloading in order to gain clearance from European competition regulators for its £1.2bn takeover of EMI.

However, with Universal's owner Vivendi locked in negotiations with Brussels over the disposals needed to win approval for the EMI deal, it is not clear if Universal will definitely sell Virgin. Branson's activity, though, suggests that he is hoping to bounce Grainge into a quick sale.

Branson is set to team up with Patrick Zelnik, the French entrepreneur who launched Virgin Records in France in 1980, and possibly other financial backers to put together a business plan to buy the label.

"I have had informal talks with both Lucian Grainge and Patrick Zelnik about Virgin Records," said Branson. "I have known Lucian and Patrick for both 30 years. They are great record men and Patrick has committed to revitalise Virgin Records – which has been mismanaged in the last 10 years."

He added that he was serious about a bid in partnership with his former colleague: "The potential disposal of Virgin Records by Universal is an exciting opportunity and I am keen to try to work on an arrangement with Patrick Zelnik to acquire the company I started in the 1970s." No price was mentioned.

Branson said that he and Grainge viewed Virgin Records as a "sleeping beauty" which could yet become an "innovative and leading label once again with the right management and investment".

Zelnik, who has an 80% stake in French label Naive, said that while Universal is focusing on disposing of assets to appease market share issues in Europe the business plan for Virgin is predicated on an international basis.

"We are only interested if it is [a] global [deal]," said Zelnik. "We are just starting to get figures together for the business plan."

It is expected that Universal will know by the end of the month whether the European commission has accepted that the concessions go far enough to give a green light to the EMI deal.

Other assets on the list reportedly include labels such as Chrysalis UK, excluding Robbie Williams, Ensign, Mute, Jazzland and Sanctuary.

Universal was originally bullish about pushing the deal through the regulatory process, and offered few concessions.

However, the music giant is under immense pressure as it has guaranteed to pay EMI's owner Citibank the entire £1.2bn by the middle of September regardless of whether the deal goes through.

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