Some things, no matter how much they are missed, are just never coming back. The eight-track tape. Prince. David Bowie. Also, the $225 million that investor Guy Hands says he personally lost investing in record label EMI - and which he finally gave up on recouping through the courts on Friday.
The British buyout baron's withdrawal of a lawsuit against Citigroup brings to an end a nine-year saga that might be one of private equity's most unedifying tales. Terra Firma bought the already troubled EMI for $6.3 billion in 2007. It promised a "revolutionary new structure" for the business, and announced it would sack as many as 2,000 people, causing a ruckus among its artists. The decline of CD sales, and an overburdened balance sheet, sped EMI to the great jukebox in the sky. Citi, the provider of Terra Firma's debt financing, seized the business in 2011. Hands tried to sue, failed and then appealed.
Very little about the case created a positive impression of either side, or of the buyout boom that spawned the EMI deal. Hands asserted that Citi misled him - in particular, claiming that a counter-bid was imminent from rival buyout group Cerberus. That speaks volumes about the times in which the transaction was forged. Investors might have hoped that a buyout firm would base its offer on an analysis of returns, based on careful due diligence, rather than an assumption that someone else might want it more.
Terra Firma, which still owns Odeon & UCI Cinemas and the Four Seasons chain of old-folks homes, looks forlorn. A withdrawal statement laments that the firm's memory of events proved insufficient to win the case. But what stands out most is how passe the whole thing feels - and not just because companies like Spotify and Apple have given record labels a whole new set of problems Hands could barely have imagined in 2007. When bank bashing was the zeitgeist, a Wall Street firm getting one over on a client elicited anger. Now the debate has moved on. Maybe Hands can too.
