Universal Music Is Urgently Selling $650 Million In Assets to Pay for EMI…

Universal Music Group will be forced to sell more than $650 million in ‘non-core assets’ in order to purchase EMI, according to financial disclosures shared by parent company Vivendi. That’s 500 million euros, or nearly half the sale price of 1.2 billion euros ($1.58 billion), also according to Vivendi. “This project is expected to generate more than £100 million per annum in synergies,” Vivendi informed investors, with ‘project’ referring to the proposed merger. “UMG is committed to sell €500 million of its non-core assets to partially finance this transaction.”

The fire-sale changes the debate over this merger, and could potentially ease the regulatory approval process. Because buying a massive major label is one thing, but selling a massive amount of stuff to do it is another. And, according to subsequent comments made by Vivendi SA chief financial Philippe Capron, the plan is the dump these assets before the decision is dropped – ie, over the next few months. “We want to get this done by the time regulators give their verdict on the Universal Music and EMI transaction,” Capron told Bloomberg this morning.

The news was closely followed by the ‘sale’ of UMG-owned Fontana Distribution to INgrooves. Universal owns a very substantial chunk of INgrooves, which makes this look more like a deal among friends than a bona fide acquisition. Still, sale probably helps the cash situation, and INgrooves now becomes INgrooves Fontana.

Meanwhile, the clock is ticking… sort of. The European Commission issued a tentative deadline of March 23rd, though in reality, these guys take their own damn time. Which is why Vivendi chief Bernard Levy told investors to expect a decision during the second-half of this year. Stateside, the Federal Trade Commission (FTC) is also taking a look, though the Europeans are typically ten-times tougher.

The enemies of this merger are growing increasingly vocal. That includes – surprisingly – Warner Music Group, whose ex-chairman Edgar Bronfman promised to fight this ‘tooth and nail,’ based on lopsided market shares. Other noted enemies include indie consortia AIM and IMPALA.

Source: Digital News