Universal Said to Offer Sale of EMI Classics, Most of Parlophone

Vivendi SA (VIV)’s Universal Music Group offered European regulators to dispose of local assets that may fetch more than 250 million euros ($309 million) to soothe antitrust concerns over its takeover of EMI Group’s recorded- music business, said one person familiar with the matter.

Universal offered to sell Parlophone Records, home to Coldplay and Gorillaz, in the U.K. while keeping the label’s Beatles songs, the person said yesterday, declining to be identified as the matter is not public. The company would also sell some labels including EMI Classics and Virgin Classics in Europe and EMI’s units in France, Belgium, the Czech Republic, Poland, Portugal, Norway and Sweden to get approval for the 1.2 billion-pound ($1.9 billion) deal, the person said.

Universal Music, the world’s largest record company, yesterday said it submitted a package of concessions to European Union regulators. Universal has a list of about 20 entities, ranging from independent music labels to major rivals such as Sony Music Entertainment and Bertelsmann AG’s BMG Rights Management LLC, which have indicated interest for assets potentially up for sale, according to two people familiar with the process.

“We believe the package fully addresses the commission’s concerns and follows our constructive discussions with regulators, independent labels and competitors,” Universal said in an e-mailed statement, adding that it’s “confident of receiving clearance.”

Market Testing

The offer will now be circulated to third-party record labels and customers for so-called market testing.

A Universal representative declined to comment on details of the concessions. A representative for BMG also declined to comment.

Citigroup Inc. (C) agreed in November to sell EMI Group’s recorded-music and publishing businesses in separate transactions. Universal agreed to buy EMI’s record labels and a Sony Corp (6758).-led group that includes billionaire David Geffen paid $2.2 billion for the publishing unit.

Universal also offered to sell the Virgin Classics label in Europe and the British catalogue of Pink Floyd. A sale of Chrysalis Records would not include songs by Robbie Williams, the person said.

Proposed Concessions

Universal is also proposing to divest some its own businesses, including Sanctuary Records, its business in Greece and several European jazz labels, EMI Chief Executive Officer Roger Faxon said in an internal e-mail to employees yesterday.

Universal would keep the biggest parts of the EMI Records and Virgin Records businesses in Europe under the proposed concessions, the person said.

Richard Branson said this month he would bid for Virgin Records, the music label he started in London in the 1970s, should Universal sell the asset.

Branson had held talks with Patrick Zelnik about bidding together, Nick Fox, Branson’s spokesman, has said. Zelnik started Virgin Records in France in the 1980s and is co- president of Impala, an independent record labels group based in Brussels.

Smaller independent companies will be allowed to bid first for some assets, the person said. The deadline for the European review of Universal’s bid is Sept. 27.

Universal would re-invest the proceeds from the sale to rebuild EMI, the person said.

Vivendi yesterday rose 1.3 percent to 15.42 euros in Paris trading, valuing the company at 20.1 billion euros. The stock has declined 5.8 percent this year.

Competition Concerns

EU regulators last month sent Universal a list of potential competition problems, noting the deal would remove a key rival and could harm competition for music sales. While regulators can block potentially anti-competitive deals, companies usually try to eliminate such concerns by offering to sell units or promise to change business behavior.

Universal would be “almost twice the size of the next largest player” in Europe, the EU said in March when it started an in-depth probe into the EMI deal.

To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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