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Citigroup Vends Liabilities of $2.2B

Zacks Equity Research

Citigroup Inc. (C) recently transferred the obligation of paying pensions to about 20,000 employees of EMI Group to Pension Insurance Corporation. This is anticipated dispose liabilities of approximately £1.5 billion ($2.2 billion). The financial terms of the deal were not disclosed.

The deal is the largest since 2011, when Legal & General took pension liabilities of £1.1 billion from the T&N Retirement Benefits Scheme.

In Nov 2011, Citigroup divided EMI Group into 2 parts and divested them. Along with the sale of its recorded music division to UMG, EMI Group’s publishing division – EMI Music Publishing – was sold to a group of investors led by Sony Corporation of America (:SCA), a U.S. subsidiary of Sony Corporation (SNE) for $2.2 billion.

The sale of EMI Group’s recorded music and publishing assets is an achievement for Citigroup. In 2007, Guy Hands and his private equity team at Terra Firma offered $6.7 billion for EMI Group but failed to meet the loan payments provided by Citigroup to finance the deal. Consequently, Citigroup took over EMI Group in February and since then, has been conducting auctions to sell the British music company.

In Jul 2012, the Federal Trade Commisssion (FTC) approved the deal between Sony and EMI Music Publishing. The agreement gave Sony the right to purchase EMI Music Publishing from Citigroup.

However, the deal gained sanction from the European Union (EU) in Apr 2012 on the condition that EMI Group would have to vend the worldwide publishing rights of artists such as Robbie Williams and Lenny Kravitz. Consequently, in Oct 2012, Citigroup completed the sale of EMI Group.


We believe that this vending of liabilities will benefit Citigroup and go a long way in reducing its expenses amid a challenging macroeconomic environment.

Citigroup currently carries a Zacks Rank #3 (Hold). Some major better performing banks include JPMorgan Chase & Co. (JPM) and Northern Trust Corporation (NTRS). Both these stocks carry a Zacks Rank #2 (Buy).


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