The Universal Music Group closed on its $1.9 billion acquisition of EMI Music on Friday, a week after receiving regulatory clearance in Europe and the United States and more than 10 months after it first made the deal with Citigroup.
As a condition of approval, Universal will be forced to sell off about a third of EMI’s assets to other music companies. Even so, it will be the largest, by far, of the three remaining major record companies, with a global market share of about 36 percent.
Universal has now paid the balance of the purchase price to Citigroup, after paying roughly 90 percent of it earlier this month, Citi and Universal’s parent company, Vivendi, announced on Friday. In its arrangement with Citi, struck last November, Universal assumed the full regulatory risk for the deal, agreeing to pay the full $1.9 billion regardless of the decisions by the Federal Trade Commission, the European Commission and other government agencies around the world.
“This is a next step towards ensuring the health of our industry,” Lucian Grainge, the chairman of Universal, said in a statement. “EMI is finally returning to people who have music in their blood. We are acquiring incredible labels and a roster of stellar talent, including top-selling artists like Katy Perry, Lady Antebellum, the Beatles and the Beach Boys. We remain true to our vision of investing in EMI, growing the company as a vibrant source of new music, offering consumers more choice and supporting the growth of online music services.”
Just 15 years ago there were six major labels, but their ranks have consolidated through successive mergers.
According to the European Commission’s conditions for approving the deal, Universal must sell off EMI’s prestigious Parlophone label along with a long list of other labels and assets, which means that the worldwide rights to release music by superstars like Coldplay, Pink Floyd and Kylie Minogue will be up for grabs.
Those assets might be worth well over $500 million, and according to the European regulators’ conditions, the majority of them must be sold to a single music company, to shore up competition.
The sales have not begun, but among the likely bidders are the Warner Music Group, Sony Music Entertainment and BMG Rights Management, which is backed by Bertelsmann and Kohlberg Kravis Roberts.