Citi Plays Chicken Over EMI

The sale of EMI has become more like a game of chicken, as U.S. bank Citigroup is said to have continued talks with the two major bidders that were said to have walked away from the auction.

The New York Post and UK papers including Daily Express and Mail On Sunday are saying Universal Music Group and Len Blavatnik’s Access Industries are still in talks to buy the company’s recorded music business.

At the beginning of the month, both parties were said to have dropped their interest.

Apparently Universal wasn’t happy with the size of the pension obligations the major label accumulated. Meanwhile, Blavatnik was believed to be impatient because his £1.5 billion offer for the record company wasn’t immediately accepted.

The bidding process looks to have become a game of nerve as Citi holds out for top dollar – despite a weakening market – while Universal and Access threaten to drop their bids if they can’t get acceptable terms.

It now seems as if the behind-the-scenes talks with Universal revolve around Citi’s willingness to swallow some of the pension fund losses.

The talks with Blavatnik are believed to have resumed because his offer, although not quite up to the bank’s expectations, was still the highest bid on the table.

It’s been more than a month since Citi asked bidders to make their final offers. The whole process now appears to have become bogged down while the bank tries to gauge whether those final offers are really that.