EMI DERBY: WHO’S OUT, WHO’S IN
AND WHO’S SPINNING?

UMG and Warner Music owner Len Blavatnik may both get back into the bidding for EMI’s recorded-music assets, reversing their respective decisions to walk away from the auction, BusinessWeek reported over the weekend, citing people familiar with the situation.

UMG cut off negotiations with Citigroup after it was revealed that EMI has a pension-plan liability of $640 million, though Citi reportedly insists the figure is far lower, closer to $240 million.

Blavatnik ended talks with Citi last week over a price dispute. He’d been prepared to offer about $1.6 billion, while Citi was looking for about $1.9 billion. The Russian billionaire is believed to be looking to lock down some concessions from Citigroup, such as a lower breakup fee and liability waivers in the event of delayed regulatory approval.

If both WMG and UMG were to pull out, that would leave only financial bidder Ron Perelman, who has been considered a long shot throughout the process.

Spokespersons for Universal, Citi and WMG all declined to comment, obviously.

Meanwhile, BMG Rights Management and Sony/ATV are squared off in the competition for EMI Music Publishing, which may fetch about $2 billion, people familiar with the situation have said.

According to our own I.B. Bad, the BusinessWeek report, as well as a similar story in the Wall Street Journal, are actually Citi’s spin in an attempt to draw out the Russian bear, who had bid $400 million more than anyone else for recorded music. If Citi is willing to make huge concessions, UMG could reenter, but those same concessions would also bring Boris back to the table. If Blavatnik doesn't get EMI, he becomes a seller—but Vegas still has him as the prohibitive favorite to come out on top.

So the game of chicken continues into yet another week.