EMI CONFIRMS TAKEOVER APPROACH FROM WARNER MUSIC Associated Press The long courtship between EMI Group PLC and Warner Music Group is on again. EMI confirmed Tuesday that it had received an approach from Warner about a possible bid.
“There is, however, no proposal currently for the EMI board to consider,” the company said in a statement to the London Stock Exchange.
Analysts were skeptical whether this approach would be any more successful than previous overtures, because of a European Court ruling three years ago which scuppered another big merger — between the music units of Sony Corp. and Bertelsmann AG.
European regulators are now mulling whether to approve Universal Music Group's plans to buy BMG Music Publishing for about $2.09-billion (U.S.).
The bid came a week after EMI warned the market that revenues from its recorded music unit were expected to be worse than forecast — down by around 15 per cent.
New York-based Warner has its own problems, reporting earlier this month that first-quarter profit fell 74 per cent.
A combination of EMI and Warner Music would control about 25 per cent of the recorded music market, ranking second to Universal, according to the International Federation of the Phonographic Industry.
EMI's artists include Coldplay, Kylie Minogue and Norah Jones. Warner's roster includes Sean “P. Diddy” Combs and his Bad Boy label, Madonna and Paul Simon.
Last year, Warner made a bid that valued EMI at $4.9-billion, four days after EMI made a $31 per share for Warner Music, valuing the company at $4.2-billion.
The two companies called off the discussions because of doubts about whether European competition authorities would approve a deal.
“While Warner looks increasingly like the natural home for EMI, a formal bid at this stage would face significant regulatory uncertainty as the outcome of the review into the Sony/BMG merger is unknown,” said Lorna Tilbian, an analyst at Numis Securities Ltd.
She noted, however, that Warner may be seeking to take advantage of the recent fall in EMI's share price.
“The key issue within any corporate activity remains regulatory risk, following the European Court's decision to annul the authorization of the Sony BMG merger,” said Iain Daly, an analyst at Bridgewell Securities. “There is little clarity on this point and we continue to believe that this makes an EMI/Warner combination difficult to put together.”
In December, EMI also terminated discussions with an unidentified suitor, which news reports said was the European private equity firm Permira Advisors Ltd. |