Universal Music sells labels to Warner Music
Los Angeles - Universal Music Group is selling Parlophone - the label of acts like Coldplay, David Guetta and Radiohead - to Warner Music Group for $765m.
It's the largest chunk of assets that European regulators demanded be sold when Universal purchased Britain's EMI last year for $1.9bn.
Universal, a unit of Vivendi SA, sold EMI's Mute Records to BMG for about $16m in December, and it must still sell other smaller labels to complete its obligations to antitrust authorities. The sales are expected to take place in the next few months.
But the world's largest recording company is keeping key acts from the EMI roster, including The Beatles, Katy Perry and Swedish House Mafia.
The unwinding of the smaller labels will culminate in the music business being dominated by three major recording groups: Universal, Sony Music Entertainment and Warner Music.
When subtracting proceeds from the sales, Universal will have spent around $942m to acquire EMI's recording operations in the world's three largest markets, the US, Japan and Germany. The company has said it will save $157m a year through cost cuts enabled by the acquisition.
But the Parlophone sale gouges a significant UK-based hole in the roster, especially given the iconic music company's British roots.
Universal's chief executive, Lucian Grainge, has said that the divestments were larger than the company had hoped when it first announced the acquisition in November 2011.
"Following this transaction, we will continue with our global reinvestment program that is rebuilding EMI and ensuring that the company is able to reach its full potential," Grainge said in a statement on Thursday.
Deal to close by mid-2013
Warner Music's acquisition of Parlophone represents a partial consummation of a years-long courtship of EMI, since it comes without The Beatles.
Stephen Cooper, Warner Music's chief executive, said the acquisition represents a "unique opportunity," and the Parlophone brand is "highly complementary" to its current roster of artists and territories. Major Warner Music artists include Bruno Mars, Jason Mraz and Wiz Khalifa.
Warner Music will finance a substantial portion of the purchase price through a new loan. The deal is expected to close by the middle of the year.
Edgar Bronfman Jr, who had unsuccessfully tried to buy EMI as Warner Music's CEO, stepped down in 2011, months after selling the company to billionaire Len Blavatnik's Access Industries for about $1.3bn that July.
While he remains on the Warner Music board, he did not take part in the Parlophone deal.
The publishing division of EMI, which handles royalties from songwriting copyrights, was sold for $2.2bn to a consortium led by Sony/ATV, a joint venture between Sony Corp. and the Michael Jackson estate, last June.
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