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“In the Terra Firma team, we have owners who believe in the music business and are highly committed to EMI, and it puts an end to the incessant speculation about the future ownership of the company and the uncertainty that brings to us all.”
——Eric Nicoli
DONE DEAL: TERRA FIRMA GETS GREEN LIGHT TO CLOSE EMI
In Internal Memo, Nicoli Applauds Acquisition and Hands’ Plans to Take Company Private
Terra Firma has won shareholder approval for its takeover of EMI, with 90.27% of EMI shareholders accepting the deal as of 1 p.m. today London time. That deadline for getting the required 90% shareholder acceptances was the fifth and presumably final extension granted by the U.K. Takeover Panel since the deal was announced May 21—and with Warner Music now clearly out of the picture, shareholders have acquiesced.

The next question involves Guy Hands’ plans for the company and the status of EMI Group CEO Eric Nicoli, who has guided the beleaguered company through rough waters since personally taking over EMI Music in January. Nicoli’s key moves were reorganizing the North American operations as the Capitol Music Group under Jason Flom and forging a deal with Steve Jobs for DRM-free, high-quality downloads of the EMI catalog in the iTunes Music Store, an industry first.

Nicoli seemed upbeat in the internal memo he sent out today on news that the 90% threshold had been passed.

“I am delighted to confirm that our deal with leading private equity company Terra Firma became unconditional as to acceptances earlier today, with more than 90% of EMI's shareholders now having accepted Terra Firma's offer of 265p per share (or £3.2billion pounds, including debt) to purchase EMI,” Nicoli wrote. “I can also confirm that the regulatory authorities in Brussels and Washington have given their approval. Accordingly, all material conditions to the offer have now been satisfied and it is expected that the offer will become wholly unconditional later this month. After this time, there are a few further formalities to complete the process of making us a privately-owned company, including the delisting of EMI from the London Stock Exchange, but as soon as the offer becomes wholly unconditional, Terra Firma will be the controller of the EMI Group and all of its operations worldwide. To see Terra Firma's announcement of today, please go to www.emigroup.com as usual.

“This deal was recommended unanimously by the board of EMI and there are many reasons why we believe it is the best way forward for all stakeholders in EMI. It reduces the number of owners in EMI from around 18,000 shareholders with widely differing investment goals, to just one. In the Terra Firma team, we have owners who believe in the music business and are highly committed to EMI, and it puts an end to the incessant speculation about the future ownership of the company and the uncertainty that brings to us all.

“In fact, EMI will be the only purely privately held of the four so-called music majors and I believe that will be of enormous benefit to all EMI stakeholders. We are a business undergoing massive change, and private ownership will give us more flexibility as well as greater access to investment funds to pursue new strategies. It will also free us from the routine of publicly reporting financial results and trading updates, which can be somewhat intrusive to our creative processes. Being a public company involves a very high level of fiscal scrutiny by financial analysts and commentators, of our release schedules and investment strategies, and this can paint a misleading picture over relatively short time horizons, especially in such a rapidly changing environment. Financial results will, of course, continue to be of the utmost importance, but they will be judged over a longer investment time-frame.

“Of course there will be change, but I am confident that this will be change for the good. In the past eight years, as well as my role at EMI, I have been non-executive Chairman of three private equity owned companies, all of which benefited from, and were very successful in, private ownership. Terra Firma can provide us with the stability and investment we need right now to come through this difficult period of industry transition and to accelerate our programme to be the world's most innovative and consumer-focused music company, as well as the very best home to musical and executive talent. We are proud to represent a unique roster of awesomely talented artists and songwriters, and our priority will continue to be to create an environment in which they can flourish.

“We will keep you fully informed of further developments.”

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