LONDON (Reuters) - Vivendi's Universal Music Group, the largest music company in the world, has dropped out of the auction for EMI, a source familiar with the situation told Reuters on Thursday.
Bids for the British music company have been submitted to Citigroup, which has been looking for between $3 billion and $3.5 billion.
The company could now be split into two businesses between recorded music and song publishing as part of the sale.
Universal had been primarily interested in the recorded music division at EMI, which has artists such as Coldplay and Katy Perry, leaving Warner Music Group as the likely strongest contender for that part of the business.
"Universal has dropped out of the bidding for EMI," the person familiar with the matter said.
BMG Music, a joint venture between Bertelsmann and private equity firm Kohlberg Kravis Roberts, and Sony/ATV, a joint venture between Sony Corp and the estate of Michael Jackson, are interested in the publishing unit, sources have told Reuters.
Citigroup seized control of EMI in February after its previous private equity owner, Terra Firma, defaulted on a loan.
Vivendi declined to comment and a spokesman for EMI was not immediately available.
(Reporting by Leila Abboud; Editing by David Hulmes)