The LA Times reported yesterday that Vivendi’s Universal Music Group is rejoining talks for the purchase of troubled EMI. This is after Len Blavatnik dropped his $1.5 billion bid. The billionaire CEO of Access Industries, which is the owner of Warner Music Group, dropped his bid for EMI after an agreement over pension funding could not be reached. EMI is asking for $600 million to finance the fund for its 21,000 employees, according to the LA Times. There’s no word yet if Universal and EMI, owned by Citigroup, have reached a deal and no suggestions the former will up its offer of $1.2 billion.
 
As reported by The Wrap, the whole thing started in May 2007 when Guy Hands, CEO of the private equity firm Terra Firma, borrowed $5 billion from Citigroup and used $2 billion of investor bucks to acquire EMI. EMI is owner of the world’s largest music publisher and has been home to some of the biggest Brit names in music: David Bowie, the Beatles and Pink Floyd to name a few. (Its current roster includes some 1,400 artists including chart toppers like Katy Perry and Lady Antebellum.) Hands had banked on refinancing his debt in the financial markets. But when the global financial crisis struck, the markets froze. Album sales, amidst a decade long decline, did not help matters. Hands would default on his loan to Citigroup, as also reported by The Wrap, and it would acquire the company in February in a debt-for-equity swap. EMI remained with $1.9 billion in debt after Citigroup wrote off two-thirds of it. Hands tried to sue the bank, accusing them of misleading him to over-bid in the initial purchase of EMI. Hands lost the case.
 
Citigroup quickly put EMI up for auction. Blavatnik was seen as a front-runner, as he outbid Universal. Soon talk began of a Warner-EMI merger. But after talks petered out over the pension issue Citigroup invited rival Universal back to the table says NY Post, which is where we are now. Whatever happens, the loss of EMI’s independence brings the number of major competing labels down from four to three, which could spell regulatory troubles in both the U.S. and Europe. It’s also unknown what shape EMI will emerge in after the deal: Intact, or split up into separate pieces.