Private Equity Firm That Bought EMI Sues Citigroup For Misleading It Into Deal
from the oh-come-on dept
Since then, however, everything has pretty much collapsed. While they weren't saddled with preconceived notions, they were saddled with dreadful contracts, and every attempt to change them resulted in charges from EMI's biggest artists that the company was trying to screw them over. On top of that, the company started giving really mixed messages. At times it seemed to be embracing the new, and at other times, it would try to personally bankrupt the CEOs of innovative startups. It didn't take long for the tech experts EMI brought in to quit. Then, there were stories of infighting at Terra Firma, with arguments over what to do with EMI altogether, which could explain some of the contradictory strategy decisions.
Either way, Terra Firma has now decided to sue Citigroup for misleading it into the deal. Again, given the state of the recording industry, it's hard to see how they thought it was going to be a good deal in the first place, but Terra Firma claims that Citigroup lied to Terra Firma about other bidders to get the firm to pay more and pay now -- noting that Citi had a major conflict of interest in acting both as an advisor and a financier of the deal. Of course, that's how investment banks make their money anyway. They want deal flow, so they have a neat little script that always encourages more deal flow. At times, they talk about synergies, and why companies need to buy each other, and then once they get big, they talk about spinning off parts to "unlock shareholder value." You can't trust those guys for an honest assessment of such a deal, and if Terra Firma did so, it seems like it should be the firm's own fault.