On Friday, EMI Group CEO Roger Faxon sent an internal memo to his staffers, updating them on the state of the Universal Music Group-EMI deal. Meanwhile, as expected, UMG submitted its latest concessions to the European Commission on Friday as well, as it seeks approval of the merger.
Faxon's memo, reprinted by The Financial Times, begins by noting the "journey" that EMI has been on in recent years, following its transition through Citi. Faxon notes that when it comes to approval of the deal, "in a number of jurisdictions, Universal has been able to resolve the issues and has already received clearance. Now the focus is clearly on resolving the issues in the largest and most complex markets - and none is more important than Europe."
He then recaps the recent developments with UMG and its potential concessions to the EC regulators, then confirmed what Universal would be proposing in its concession package:
• In the UK, an entity composed of the rosters and catalogues of Parlophone (excluding TheBeatles, both as a group and individually), Mute, Chrysalis (excluding the Robbie Williams catalogue) and Ensign would be sold. Included in that disposal would also be the Pink Floyd catalogue and the recently concluded new deal with David Guetta, along with his catalogue. Note that these disposals only relate to exploitation of this repertoire within the EEA. • EMI Classics and Virgin Classics would also be divested in the EEA. • EMI's share of the NOW brand and compilation business in the EEA would also be sold. However Universal would keep its share and participation in the Now compilation venture. • The proposal also includes the divestment of a number of EMI's operating businesses in Continental Europe. Those local operating companies are EMI France, EMI Belgium, EMI Czech Republic, EMI Poland, EMI Portugal, EMI Sweden and EMI Norway. • Universal is also proposing to divest some its own businesses, principal among which are Sanctuary, Co-Op, and UMG Greece plus several European jazz labels. • They would also commit to terminate or not to bid for a number of high-profile European licenses for major Anglo-American and domestic repertoire, namely Disney Records, Hollywood Records, Ministry of Sound, and Restos du Coeur in France.
Faxon added that while the regulators could approve UMG-EMI as soon as late September, he believes "it is more realistic to plan for a close at the end of October." Once the deal is closed, then the aforementioned assets would go up for sale. "Then of course there will be an extended period before that sale process results in a completed transaction. So as I say, we have some considerable time to get this sorted, and to make plans that take into account the needs of our staff and our artists."
According to reports, the next step for the EC regulators is to "market-test" UMG's proposal to the label's competitors to gauge whether the concessions are enough to allow the deal to pass.