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“Robbie Williams says he will remain at EMI following the unexpected success of his album Rudebox. However, less successful artists such as newcomer Katy Perry are dropped from the label."

WHAT IF GUY HANDS HAD NEVER BOUGHT EMI?

Things Turn Ouite Quite Differently for All Concerned in This Cleverly Imagined Scenario
Today’s online edition of Private Equity News contains a fascinating piece by Jennifer Bollen bearing the provocative title, “What if Guy Hands had never bought EMI? An alternative history...” In Bollen’s fantasy, Terra Firma escapes the EMI deal by instead snagging Alliance Boots, a company it had in reality aggressively pursued in 2007, the same year Hands wound up with EMI. Here’s the imagined timeline, which follows the possible courses of both Terra and EMI had they not been in bed together:

May 2007: Terra Firma joins private equity's top tier and is touted as the next Kohlberg Kravis Roberts after it and U.K. investor The Wellcome Trust beat the New York rival to an £11 billion takeover of pharmaceuticals retailer Alliance Boots. The deal is Europe's biggest leveraged buyout to date. A banking consortium led by Citigroup backs the transaction with a hefty debt package totaling £9 billion. Sources close to the situation said Hands celebrated his victory over KKR by singing Frank Sinatra's “New York, New York” to his staff at Terra Firma’s London office.

June 2007: Keen to cement its position as one of Europe's biggest buyout firms, Terra Firma is understood to be mulling its own initial public offering in a move which would value the firm, and effectively Hands, at about £1.5 billion.

July 2007: Hands admits he is nervous over the ability to syndicate the debt used to finance the buyout of Alliance Boots as credit markets seize up. Source close to the firm say Terra Firma has delayed its IPO plans amid market turmoil.

January 2008: Banking sources say Alliance Boots’ lenders have successfully syndicated most of the deal’s debt.

June 2008: Alliance Boots enjoys a good first year under Terra Firma’s ownership, reporting an 18% rise in earnings before interest, tax, depreciation and amortisation to £1.1 billion.

October 2008: Following widening losses at EMI, Hands says it would be an ideal private equity target for a turnaround but that he has his hands full with Boots. EMI artists including Radiohead and the Rolling Stones announce they are bringing forward recording plans in an effort to boost album sales.

December 2008: Pop star Robbie Williams quashes rumours further woes will arise at EMI due to his alleged plans to leave the label to rejoin boy band Take That. He says he will remain at EMI following the unexpected success of his album Rudebox. However, less successful artists such as newcomer Katy Perry are dropped from the label.

May 2009: Rumors circulate that Hands will move to Guernsey in an attempt to gain non-domiciled status ahead of a rise to 50% income tax in the U.K., but he insists "now is not the right time".

December 2009: Terra Firma ends another difficult year for the industry by raising €9 billion for its latest buyout fund in the biggest private equity fundraising in Europe since U.S. investment bank Lehman Brothers collapsed in September 2008. The fundraising followed the €5.4 billion vehicle Terra Firma raised in 2007. The firm celebrates its success at a Christmas party at Hands’ home with guests including neighbor and buyout veteran Jon Moulton and close friend and Citi banker David Wormsley, who oversaw Citi’s loan to Alliance Boots.

April 2010: Terra Firma adds further weight to its brand by bailing out Candover and buying the troubled private equity house’s listed parent, Candover Investments. Terra Firma beat competition from the Alberta Investment Management Corp., which is responsible for investing the pension assets of the Canadian province of Alberta.

May 2010: Following Terra Firma’s expansion through the Candover deal, Hands moves to Guernsey.

June 2010: Hands is knighted for his services to business and rumors circulated he has been offered a seat in the House of Lords. However, his recent move to Guernsey means he cannot accept it.

July 2010: Sir Guy joins delegates including Gerry Grimstone, chairman of insurer Standard Life, and former Olympian Sir Steve Redgrave on U.K. Prime Minister David Cameron’s trade visit to India.

September 2010: Cameron appoints Sir Guy to his business advisory panel as its only representative from the buyout industry.

November 2010: Investors expect Terra Firma to emerge from the credit crisis as one of Europe’s most highly regarded private equity firms—its portfolio company Alliance Boots continues to perform well with a 6% rise in first-half fiscal 2010 revenue to £8.95 billion. The company says it is well positioned for the second half, which includes the important Christmas trading period, and it is expected to deliver strong results for the full year.

Meanwhile, Terra Firma is expected to launch its IPO next year and to cement its position as one of Europe’s biggest private equity players after banking sources say the firm has begun talks with Citigroup over a “pre-crisis-style” debt package for another £10 billion buyout.
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