EMI agrees $4.7 billion offer from Terra Firma

22 May 2007

The world''s third largest music company, the UK-based EMI has agreed to a £2.4 billion ($4.73 billion / Rs 19281.6 crore) offer in cash for a takeover by private equity group Terra Firma The agreement also includes a break fee of £24 million if EMI pulls out.

If accepted by shareholders, the deal would bring an end in a move that could finally shut the door on the efforts of the world''s fourth-largest music company, Warner, a long-time suitor for EMI.

In the past the two groups have tried to merge, but were put off by the prospects of uncertain regulatory approvals. Terra Firma''s offer, however, poses no regulatory uncertainty.

The offer translates to 265 pence a share and values EMI at 18.5 times EBITDA. Including debt the deal also puts a value of £3.2 billion pounds on EMI, whose assets include singers Kylie Minogue and Norah Jones.

Investors, however, expect a higher counter bid and the company''s stock rose 9.3 per cent higher at 271 pence.

According to reports the private equity group would keep EMI intact and proceed with plans to securitise the company''s music publishing assets.