Access Industries, the owner of Warner Music Group, has dropped out of the bidding war for EMI. Access was said to be the front-runner in the EMI auction, making Billboard‘s Sunday evening report of withdrawal come as a surprise. Originally reported by Financial Times, founder and chairman of Access Industries Len Blavatnik walked away from the $3 billion to $4 billion auction that turned Citigroup‘s attempt at selling EMI’s recorded music operation into “a tense game of brinkmanship” after Blavatnik offered only $1.5 billion. Financial Times also said that if financial conglomerate Citigroup can’t bring Blavatnik back to the negotiating table, that the company may have to retain EMI for another year or more and restart the auction at a later time.
After Universal Music Group withdrew its bid last week, and Ron Perelman’s MacAndrews And Forbes allegedly made an offer even lower than Access, it seems that Citigroup may not be able to hold out for its price for long. However, Billboard speculated that UMG could have easily been pulling a negotiating maneuver by withdrawing, meaning Access’ withdrawal now might make it easier for UMG to score EMI if it can pay Citigroup’s price. Similarly, WMG’s dropout may have also been part of a strategy to restart negotiations between UMG and WMG altogether.
Things are looking better for Citigroup on the other arm of the EMI auction, as Sony and BMG are both fighting it out for EMI Publishing with the bids reported around $1.8 billion—a deal that may or may not go through if Citigroup is unable to get its asking price for the recorded music operation. Stay tuned for more details on this one.