[UPDATE 2] Universal Music Makes $1.6B Payment To Citi, Reportedly Must Sell 25% Of EMI To Seal Deal

(UPDATE 2) A Vivendi spokesperson has confirmed that the company made the scheduled $1.6 billion payment to EMI owner Citi late last week. The payment was due whether the $1.9 billion deal is approved by regulators or not. As of Tuesday morning, the deal's fate has remained a secret, with no leaks emerging from Friday's meeting between EU regulators and Vivendi Universal.

As the
Universal Music / EMI deal enters its final phase of regulatory review in
Europe, it has been reported that the European Commission will require
Universal to sell the global rights to EMI’s leading music label Parlophone,
which houses top talent including Coldplay and Kylie Minogue. (UMG will likely be
able to retain the global rights to The Beatles). This would mean that
Universal would be required to sell a quarter of EMI (worth approx. £300
million) in order to be allowed to purchase the remainder for £1.2 billion.Universal has said it will sell some assets, but not offered specifics publicly.

It was previously predicted by many that the deal would be approved, but only with certain
conditions. Executives from Vivendi (the owner of UMG) and many analysts all expected
the EU to approve the $1.9 billion deal with conditional approval. While UMG's
offer to regulators included the sale of the global rights of the Parlophone
catalog (excluding the Beatles) and other catalogs, the company had originally
only offered to sell the European rights.

Whether or
not the deal is cleared by competition authorities, Universal must pay the
investment bank Citigroup (whom UMG agreed to purchase EMI from last year) £1.25
billion today under the terms of the deal. In preparation, Universal is
reported to already have 22 buyers lined up to purchase parts of EMI. UMG is
also said to be in negotiations over the sale of assets to BMG, while being in
talks with Warner Music and U.S. billionaires Ron Perelmann and Ron Burkle, who
were all interested in purchasing EMI when it was put up for sale last year.

Last week, Vivendi CFO Philippe Capron said that the group still viewed the EMI buy as a good deal, even if they were required to make significant concessions to get it approved. Despite giving up Parlophone, the new combined group would include an incredibly vast library of current top-selling and legacy artists the likes of Jay-Z, Kanye West, Katy Perry and Pink Floyd.

The European Commission is said to make their formal announcement by September 27th. Competition regulators in Canada, Japan and New Zealand have already cleared the takeover, while the U.S. Federal Trade Commission is expected to end their review soon, as well.

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