Music: Hits Wholesale, Sheik Owners put EMI catalog on the Block

-Bloomberg

Mubadala Investment Co. has begun reaching out to potential suitors for the EMI Publishing catalog of more than 2.1 million songs, which includes hits from Beyonce and Carole King, said the people, who asked not to be identified discussing private information. The Abu Dhabi sovereign wealth fund has held talks with Sony and approached other possible buyers, including entertainment groups and potential financial bidders, the people said.

Mubadala is seeking a valuation of at least $4 billion for EMI, the people said, almost double what the Sony-led group, which also includes billionaire David Geffen, paid for the business six years ago. A sale would be the largest music-industry transaction since the last time EMI changed hands.

Adding EMI’s extensive catalog would solidify Sony’s position as the largest music publisher, as paid streaming services proliferate and valuations for music copyrights soar. The Tokyo-based company already owns almost 40 percent of EMI, and operates the business.

Mubadala has signaled its intent to sell its majority holding, the people said, and plans to exercise an option that would force Sony to acquire its stake or trigger a sale of the entire company. While that process can’t formally begin until the end of June, the people said, Mubadala is already reaching out to interested parties to gauge pricing.

If talks with SONY fail, the label risks losing the catalog to one of its largest competitors. Billionaire Len Blavatnik, the owner of Warner Music Group, has expressed interest in EMI, two of the people said.

Sony’s new Chief Executive Officer Kenichiro Yoshida has said he likes businesses with recurring revenue. Music publishing has long offered owners a steady source of cash, in contrast with the more cyclical recorded music business, which is dependent on hits and retail sales and has historically risen and fallen depending on the success of new releases in a given quarter.

The company had almost $12 billion in cash and equivalents on its balance sheet as of December, and last month lifted its profit forecast for the fiscal year through March.