LONDON (CelebrityAccess MediaWire) — Like an old lion, past its prime, EMI can still be considered a formidable opponent but in the metaphorical veldt of the music business, the dangerous jackals of private equity may have started circling.
After the second announcement by the troubled music giant in which profit and revenue forecasts were cut, rumors of a private takeover are making the rounds. The Independent Online has reported that a number of hedge funds may take advantage of the record giants weakness to snap up stock in a hostile take-over bid, with Jim Fifield and Marty Bandier, the outgoing chairmen of the company's music publishing business being floated in connection with the bid.
Its not the first such attempt. Permira, a private equity firm made a takeover bid in December and rival Warner had also engaged in a frothy discussion with EMI about a possible merger last fall. EMI has an extensive catalog of past and present top-rate talent, including The Beatles, Coldplay and Norah Jones so any talk of a takeover or sell-off should bring the rapt attention of rivals like SonyBMG and Warner Music.
The cut-rate condition of EMI's stocks are the fuel behind these rumors. After EMI's profit warning of a brutal 15 percent drop, citing "an exceptionally high level of product returns" they are now considering, according to the Sunday Times, borrowing 1 billion dollars against its profitable music publishing arm to pay off some debt and increase their liquidity as a bulwark against takeovers.
They are also working at other means of cost cutting, with plans in the works to put 1000 of their employees out, approximately 10% of their current workforce.
EMI may be the latest in a string of private equity take-overs of corporations. Such take-overs frequently see drastically undervalued stock purchased by hedge funds or other private equity money managers to reap large profits. – CelebrityAccess Staff Writers