Terra Firma abandons EMI case

After four days in court, the European buyout firm has dropped its case against Citigroup.

Terra Firma has dropped its suit against Citigroup in which it was seeking £1.6 billion ($2.3 billion; €1.9 billion) of damages relating to its acquisition of EMI in 2007.

“These claims were brought in good faith,” Terra Firma founder and chair Guy Hands said in a statement. “However, it has become evident that our documentation of the fast-moving and complex events, and memories of these events after nine years are no longer sufficient to meet the high demands of proof required for a fraud claim in court.”

The European buyout firm had alleged that three bankers at Citigroup had supplied misleading information during an auction for the then London-listed record company EMI, including on the number of bidders and the price. The firm subsequently lost £1.5 billion when Citi took control of the company in 2011.

The case began in the High Court in London this week. In his opening remarks, Terra Firma’s legal counsel Lord Grabiner QC told the court that much of the case rested on contradictory accounts.

Hands was the first witness to take the stand and began giving testimony on Wednesday. During a challenging round of questioning from Citigroup’s barrister Mark Howard QC, Hands had claimed that if he had not been told the pricing information by Citigroup banker David Wormsley, Terra Firma would not have bid for the company.

Citi denied the allegations. The bank put out a statement today that said: “We have always maintained that the allegations made by Terra Firma are entirely baseless and that Citi, specifically David Wormsley, Michael Klein and Chad Leat, acted at all times with absolute honesty and professional integrity throughout the EMI transaction.”

Terra Firma will pay Citi's legal costs.

“The matter is now closed,” Hands said in the statement. “Terra Firma is looking to the future. We have an exciting portfolio of companies, a talented and experienced team, supportive and loyal investors and one billion euros of capital to invest.”