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Universal to invest in EMI after £1.2bn acquisition

Universal, the world's largest music group, has acquired EMI's recorded music business for £1.2bn, while the British company's music-publishing assets are set to be sold to Sony.

France's Vivendi, which is the parent of Universal, has purchased EMI's recorded music division – whose artists include Katy Perry, pictured, The Beatles, Tinie Tempah, Gorillaz and Coldplay – from its lender Citigroup.

The Wall Street investment bank took control of EMI in February after its previous owner Terra Firma, the private equity firm of Guys Hands, was unable to meet its loan covenants, following its ill-fated £4.2bn acquisition in 2007.

Citigroup is also close to a $2bn sale of EMI's music-publishing assets to a Sony-led consortium, which would draw a line under a turbulent four years for EMI.

Jean-Bernard Lévy, the chief executive of Vivendi, stated: "We are very proud to welcome EMI into the Vivendi family.

"We are confident that we will be able to create additional value for our shareholders thanks to our knowledge of the industry and our proven track record of successful integration."

Vivendi said it will finance the £1.2bn acquisition from its "existing credit lines" but will concurrently also sell €500m worth of non-core assets of Universal. The price tag represents a multiple of seven times EMI's underlying earnings, prior to cost savings.

While job losses are likely among the combined group's 7,600 employees, Universal stressed it planned to invest in EMI and that it was "committed to the music industry and the development of artistic talent".

EMI is thought to have suffered from a slowdown in investment, as Terra Firma wrestled with its debt mountain and then it fell under Citigroup's subsequent ownership.

Lucian Grainge, the chairman and chief executive of Universal, said: "UMG is committed to both preserving EMI's cultural heritage and artistic diversity and also investing in its artists and people to grow the company's assets for the future."

In the auction of EMI's recorded music business, Universal is understood to have seen off competition from Warner Music Group and BMG Music Publishing.

Universal's acquisition is expected to complete inside the next 10 months, pending regulatory approval in the US, Europe, Japan and Australia.