Hands Would Buy EMI If Price Is Right

Having lost control of EMI because his private equity firm couldn’t repay the loans needed to buy it, Guy Hands says he’d be willing to buy it back if the price is right.

“We disagree quite strongly about what it’s worth,” he said, during a speech in Guernsey.

Although EMI chief exec Roger Faxon believes that Citigroup’s seizure of the company has given it “one of the most robust balance sheets in the industry” and told the Los Angeles Times it has “a very strong underlying business,” Faxon also expects it’s only a matter of time before the U.S. banker sells it.

UK newspapers have conflicting reports of what the future is likely to hold for EMI, with some stories suggesting 2011 will be a year of major upheaval for the major music business companies.

Some have suggested Warner Music is readying itself for a bid for what was the only remaining English-owned major, but the Mail On Sunday says Hands may be making a bid for Warner and EMI and merging the two groups.

The record business has already cost Hands’ Terra Firma equity vehicle at least £2 billion.

It would also raise competition issues that would likely require one of the two companies’ publishing interests to be sold.

There’s also the question of how Hands would raise the money. Terra Firma investors are understood to have constrained him from making big deals for some time, and commit no more than 10 to 15 percent of any fund he raises to future deals.

He committed more than 30 percent of two funds to buy and hang on to EMI for over three years.

Financial website This Is Money says Hands is understood to have been approached by new investors ready to back a £1.6 billion bid for EMI – less than half what he paid in 2007 – while other papers are suggesting rival bidders for either EMI or Warner could include Canada Pension Plan, Dutch music publisher Imagem or U.S. private equity group KKR.

During the course of his Guernsey speech, Hands revealed that he had sought advice on how to slash EMI’s overheads from such an unlikely source as Rolling Stones frontman Mick Jagger, who suggested he axe the slew of “pretty girls carrying water bottles” for EMI acts.