Vivendi SA's Universal Music Group announced Friday, Nov. 11, that it has reached a definitive agreement to purchase EMI Group Ltd.'s recorded-music unit for £1.2 billion ($1.9 billion).

A separate group led by Sony Corp.'s joint venture with the estate of Michael Jackson, Sony/ATV Music Publishing, is expected to buy EMI's publishing operation for $2.2 billion. Should both sales transpire, the indicated price of $4.1 billion for all of EMI will exceed expectations widely held when EMI owner Citigroup Inc. announced in June that it would consider bids for the London-based music company.

Vivendi said the agreement places a value on EMI of 7 times Ebitda, before the substantial synergies promised by the merging of recorded-music divisions. The merger would also boost UMG's share of the recorded-music market, which Music & Copyright put at a 28.7% share for 2010, to 38.9%.

The trade group Impala, which out of Brussels represents 4,000 of music's non-major labels, vowed earlier this week to contest the increase in "market power" that a tie-up of EMI-UMG would generate. It also voiced displeasure at Sony for pursuing EMI's publishing division. Sony/ATV ranks fourth in music publishing, with a 12.5% share, while EMI ranks second, with a 19.7% share.

Vivendi said that it would finance the transaction from its existing credit lines and that it and UMG would sell noncore assets worth €500 million ($688 million). It did not comment, however, on EMI pension liabilities of up to $600 million. Those liabilities caused Vivendi to pull out of the auction late last month before returning with the winning bid.

Allen & Co. and SJ Berwin advised Vivendi and UMG on the transaction. Citi Global Banking acted as financial adviser to Citi and EMI. Clifford Chance LLP, Shearman & Sterling LLP and Freshfields Bruckhaus Deringer LLP were legal advisers to both Citi and EMI.