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Hands Drops Case Against Citi Over EMI Buyout

The founder of private equity group Terra Firma has dramatically withdrawn his fraud case against Citigroup (NYSE: C - news) over its buyout of music label EMI.

Guy Hands had been seeking damages of £1.5bn in London, claiming the US investment bank misled him in his £4.2bn takeover of EMI back in 2007 through advice that left Terra Firma paying over the odds.

Citi later took control of EMI in 2011 to recoup loans it had handed Terra Firma to complete the deal.

The announcement that the case was being withdrawn was made just days after it began following a previous civil court setback for Mr Hands in the US.

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Citi, which had always denied any wrongdoing, said in response: "We are very pleased that Terra Firma has unreservedly withdrawn the allegations, agreed to the dismissal of the proceedings and will pay Citi's costs in relation to this matter".

It (Other OTC: ITGL - news) claimed in court that Terra Firma was merely looking to blame someone else for its "disastrous" EMI deal, which completed as the credit crunch began to take hold.

Mr Hands said on Friday: “These claims were brought in good faith. 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 matter is now closed. 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".