The Work

November 14, 2011 7:04 PM

Nine Firms Land Roles as Citigroup Sells EMI Units to Universal, Sony

Posted by Tom Huddleston Jr.

UPDATE: 11/15/11, 12:00 p.m. EST. Cleary Gottlieb Steen & Hamilton secured a role advising Sony Corporation of America on European Union and international antitrust aspects of its acquisition of EMI Music Publishing. Brussels-based partners Nicholas Levy and Thomas Graf led the Cleary team.

Citigroup is breaking up the recorded music and publishing units of EMI Group, selling them in two separate transactions totaling roughly $4.1 billion to Vivendi subsidiary Universal Music Group and an investment group led by Sony Corporation of America, respectively.

In one transaction, New York–based Universal will pay $1.9 billion for EMI Music, which includes the record labels Astralwerks, Blue Note, and Capitol, according to Citigroup's announcement. The division is home to such current acts as the Beastie Boys and Katy Perry, distributes music by The Beatles, and owns Abbey Road studios in London. Universal—home to such labels as Decca, Def Jam, and Interscope—is already the music industry's largest company.

In the second deal, the Sony-led group, which also includes record executive David Geffen, the estate of Michael Jackson, Mubadala Development Company, Jynwel Capital Limited, and GSO Capital Partners, has agreed to pay $2.2 billion for EMI Music Publishing, Sony said in a press release. The unit features a catalog of more than 1.3 million copyrights from musicians ranging from Beyoncé to Whitesnake.

London-based EMI has been on the market since February when Citigroup seized it from British private equity firm Terra Firma Capital Partners in what The Wall Street Journal called "a dramatic end to one of the most disastrous leveraged buyouts of last decade's deal boom." Terra Firma had financed most of the $6.3 billion cost of acquiring EMI in 2007 with a loan from Citigroup. When the private equity firm—which unsuccessfully sued Citigroup over the deal in 2010—was unable to meet its loan obligations, Citgroup engineered its EMI takeoever by putting the music company's parent, Maltby Investments Ltd., into what amounts to the British version of bankruptcy.

Bloomberg reports that Universal topped Warner Music Group, which had bid between $1.5 billion and $1.6 billion, to win an auction for EMI Music, while the Sony-led consortium bested KKR–owned BMG Rights Management GmbH, which had bid between $1.8 billion and $2 billion for the publishing unit.

Both deals are subject to regulatory approval.

Citigroup and EMI are being represented on both deals by the same trio of firms: Clifford Chance, Shearman & Sterling, and Freshfields Bruckhaus Deringer.

Clifford Chance global corporate head Matthew Layton, in London, is leading the firm's teams advising on both deals, along with partners Daniel Kossoff and Robert Crothers. Kossoff led a team from the firm that advised Citigroup on the EMI takeover in February.

The Clifford Chance team on both deals also includes antitrust partner Tony Reeves; tax partners Dan Neidle, David Harkness, and Philip Wagman; pensions partners Hywel Robinson and Clare Hoxey; employment partner Alistair Woodland; intellectual property partner Vanessa Marsland; and litigation partners Roger Best and Simon James. Partner Mark Pistilli is also advising on competition aspects.

Shearman's team is being led by London M&A partner Creighton Condon and New York–based antitrust partner Dale Collins. M&A partner Eliza Swann, finance partner Joshua Thompson, capital markets partner David Beveridge, litigation partner Alan Goudiss, employee benefits partner Linda Rappaport, employee benefits counsel George Spera, and antitrust counsel Jessica Delbaum are also advising.

Freshfields's antitrust partners Thomas Janssens, Paul Yde, and Tom Ensign are advising Citigroup and EMI on various aspects of the transactions. They are joined by tax partners Sarah Falk and Gregory May and M&A partner Simon Marchant.

U.K. firm SJ Berwin took the lead advising Universal and its Paris-based parent, Vivendi, on the EMI Music acquisition. Legal Week reported Friday that the firm's team is led by managing partner Rob Day and London corporate partner William Holder. The team also includes European head of competition Stephen Kon, competition partner Philipp Girardet, and tax partner Gareth Amdor.

Day is the firm's relationship partner for Universal, and advised the company on last year's $2.6 billion purchase of BMG's music publishing unit, according to a biography on the SJ Berwin Web site.

Munger, Tolles & Olson served as U.S. counsel to Universal on the deal, led by corporate partners Mary Ann Todd and Maria Seferian, along with litigation partners Bradley Phillips and Stuart Senator. Stikeman Elliot partner Jeffrey Brown is advising Universal as Canadian regulatory counsel in Ottawa.

The Sony-led group, meanwhile, turned to Dewey & LeBoeuf as lead outside counsel on the acquisition of EMI Music Publishing. Dewey's team is led by M&A cochair Morton Pierce, assisted by M&A partners Chang-Do Gong, Bryan Luchs, Joseph Cosentino, Mark Davis, and Simon Briggs. Bank finance partner Gregory Owens, employment partner Howard Adler, and intellectual property partner Stanton Lovenworth are also advising.

Sony is a longtime Dewey client, according to a firm spokesman. Among the other matters on which Dewey has advised Tokyo-based Sony: the company's 2004 acquisition of MGM for $4.9 billion.

Weil, Gotshal & Manges is advising Mubadala on its role in the Sony-led consortium, with a team led by London managing partner Michael Francies, along with financial services M&A head William Gutowitz and finance partner Daniel Dokos, both in New York. The firm's London team includes tax partners Sarah Priestley and Joanne Etherton, intellectual property partner Barry Fishley, litigation partner Matthew Shankland, employment counsel Ivor Gwilliams, and real estate counsel Rupert Jones. In New York the firm turned to M&A cochair Howard Chatzinoff, technology transactions partner Jeffrey Osterman, corporate partner Douglas Ryder, finance partner Todd Chandler, and technology transactions counsel Arlene Hahn.

In 2008 Weil advised General Electric on that company's $8 billion joint venture with Abu Dhabi-based Mubadala to invest in business ventures in the Middle East and Africa.

Baker & McKenzie is serving as tax counsel to Sony and Mubadala on the EMI deal. The firm's team is led by tax partners Thomas May, in Washington, D.C., Jonathan Stevens, in New York, and tax partner Alex Chadwick, in London.


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