Buy-out firm rules out EMI offer

EMI’s takeover by private equity firm Terra Firma survived a scare today after reports said a rival buy-out group planned to gatecrash the deal.

Corvus Capital admitted it had been interested, but said in a statement that it was no longer in the running following Terra Firma’s approach.

The New York Post had earlier reported that Corvus was working on a proposal with EMI’s former chief executive Jim Fifield, who quit the group in 1998.

The possible offer valued the group at around £2.5 billion, trumping the 265p-a-share deal tabled by financier Guy Hands’ private equity outfit, although Terra Firma’s bid included another £800 million to cover EMI’s debt.

An offer from Mr Fifield would not be the first time the US-based former music group boss had made a play for EMI, according to the report.

He was rumoured to have been working on a bid earlier this year with the Qatari royal family, but reportedly walked away in February just before EMI issued a profits warning.

However, Corvus – headed by British entrepreneur Andrew Regan – said it did not intend to make an offer.

It said: “Following press speculation Corvus Capital confirms that it has actively considered making an offer for EMI Group and had access to the necessary funding to do so.

“However, given the announcement made on May 21 that Terra Firma is to make a recommended offer for EMI, Corvus Capital now confirms that it has no intention to make an offer for EMI.”

Analysts expect that EMI, which boasts stars including Robbie Williams, Kylie and Joss Stone, could still be the subject of a bid battle.

Rival label and long-time suitor Warner Music is thought to still be in the running, having been the favourite to buy the group after EMI opened its books to potential buyers last week.

Warner, which repeatedly tried to merge with EMI last year, put forward a conditional proposal for 260p a share earlier this year, which was rebuffed, and was said to be lining up to make its latest offer this week.

A number of other private equity groups are also thought to be in the frame, with US private equity groups Cerberus, Fortress and One Equity reportedly interested.

Any successful counterbid to Terra Firma’s deal would have to pay the group a break fee of £24 million.

EMI’s full year results released earlier this week revealed that revenues for the music arm fell 15%, contributing to a 61% drop in underlying pre-tax profits, which stood at £62.7 million against £159.3 million the previous year.

Mr Fifield left EMI when the group had operating profits of more than £300 million – double the £150.5 million reported in the latest set of results.

But his departure was surrounded by controversy, with investors outraged by the “golden goodbye” he received at a time when the group’s financial performance was said to be weak.

The EMI music boss was paid an estimated £6.2 million for the termination of his contract, £6.15 million in pension contributions and further share option entitlements.