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EMI receives bid approach from Warner Music

Britain's EMI said on Tuesday it had received a bid approach from US rival Warner Music the latest twist in a seven-year battle in which the two music groups have tried to buy each other.

EMI, the world's third-biggest music group, said it had not received a firm proposal from Warner Music and there was no guarantee that it would. Analysts have speculated that EMI, home to the likes of Robbie Williams and Coldplay, would receive a fresh takeover approach after it issued two profit warnings in just five weeks. But they also say that a fresh attempt to tie up with Warner Music could run into the same regulatory problems that stymied previous attempts.
„The regulatory outlook is still very uncertain,” said Numis Securities analyst Richard Hitchcock. „But given how difficult the trading environment is - US physical sales are down 20% in the year to date - they (Warner Music) will no doubt argue that the case for consolidation has been strengthened.” EMI shares traded 8% higher on the back of the bid approach. The stock, down almost 20% since the start of the year, closed at 221-1/2 pence on Monday, valuing EMI at £1.7 billion ($3.3 billion).

EMI and Warner Music first tried to merge in 2000 and again in 2003. Last year, they were locked in a $4.6 billion battle to buy each other, but hopes of a deal were quashed in June when a European court annulled approval of the 2004 merger of Sony Corp's Sony Music and Bertelsmann's BMG. That ruling cast doubt on whether EMI and Warner Music would get regulatory clearance, and the companies abandoned talks until there was more clarity from antitrust regulators.
EMI's recorded music business has been hit particularly hard in recent months, with the poor performance of new releases such as Robbie Williams' „Rudebox” adding to sliding sales of traditional singles and albums in the face of digital downloads. „If a proposal is made, it will be considered with a particular focus on conditionality, the regulatory and operational risk profile, and on valuation in relation to the company's standalone value and the value creation available from a combination,” EMI said in a statement. (