February 5, 2008
Guy Hands joins music industry rivals in bid battle for Chrysalis
Amanda Andrews and Susan Thompson
Guy Hands, the chairman of EMI, is planning to make a second-round bid for Chrysalis by today's deadline.
EMI is expected to be joined by rival music labels and private equity groups. Others considering second-round bids for Chrysalis, which owns the music publishing rights to artists such as Blondie and much of David Bowie's early work, include Warner Chappell and Sony ATV.
Nick Firth, the former chairman and chief executive of BMG music publishing, backed by a private equity fund and the United States-based independent Bug Music, are also said to be considering bids.
EMI's bid for Chrysalis comes after a decision by Chris Wright, its founder and chairman, to carry out a review the business, which could lead to a sale.
Chrysalis, which disposed of its radio business last year, has declined to comment on individual offers, but in an interim first-quarter statement it said that its board was in negotiation with several interested parties. It is not clear if the offers will be large enough to lead to a sale.
Mr Hands said in a memo to investors last year that he saw “potential for consolidation” in the industry.
Analysts have said that the group could be valued at between £150 million and £190 million. It is understood that Chrysalis received a lot of early stage interest in December, when it is thought to have held preliminary discussions with a number of parties. Mr Wright said in November that he was sitting on a “jewel of a business” but added that he was sceptical about the prospects of receiving an attractive offer in the present tough financial climate.
Marty Bandier, the chief executive of Sony/ATV, is aggressively pursuing deals, although the group has refused to comment on its interest in Chrysalis.
Terra Firma, Mr Hands's investment firm, bought EMI for £3.2billion last year and has set about a radical restructuring of the business. He has announced that he was removing nearly a third of the firm's 6,000- strong workforce as part of a cost-cutting drive that is aimed at saving the company £200million a year and creating a “new revolutionary structure” for the business.
In addition to its music business, Chrysalis also has a struggling CD distribution unit, Lasgo. The company sold its radio business to Global Radio for £170million in July
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