Wed, Feb 21, 2007 - Page 6 News List

EMI admits to approach from Warner

ON AGAIN Although the two firms had been forced to abandon previous merger plans, EMI said it had received a new approach from Warner about a possible bid


EMI Group Plc, the UK music company that cut its forecasts twice this year, said it received a takeover approach from Warner Music Group Corp less than a year after the companies abandoned efforts to buy each other.

There is currently no proposal for EMI's board to consider, the London-based company said yesterday in a statement. A proposal would be examined with a focus on the regulatory environment, EMI said. The companies retracted their offers last year on concern a combination wouldn't win regulatory approval.

EMI and Warner's music sales have slumped since the companies each offered about US$4.6 billion for the other in June. EMI said last week its recorded-music sales would fall about 15 percent in the year ending in March. New York-based Warner's music sales slid 13 percent in the quarter ended Dec. 31.

EMI shares jumped as much as ?0.2025, or 9.1 percent, to ?2.4175, and traded at ?2.3575 at 8:12am in London. Before yesterday the stock had declined 16 percent this year, valuing the company at ?1.77 billion (US$3.45 billion).

In December, EMI ended talks to be acquired by buyout firm Permira Advisers LLP, after failing to agree on a price.

Warner said on Feb. 8 that sales of recorded music slid in the fiscal first quarter as demand for new releases fell short of a year earlier, when the company had new albums from Madonna, James Blunt and Enya. Chief executive officer Edgar Bronfman made deals to boost more-profitable digital sales, which rose to US$100 million, or 11 percent of revenue.

EMI, which released albums by Robbie Williams and Norah Jones in the second half, said on Feb. 14 it was experiencing an "unprecedented level of market decline" and "an exceptionally high level of product returns."

EMI ousted its top two music executives on Jan. 12 after disappointing holiday sales. EMI has failed to produce best-selling US albums and lost revenue to piracy.

The North American market for compact discs has contracted 20 percent this year, EMI said last week, citing Nielsen Soundscan figures.

Slumping sales have led EMI chief executive officer Eric Nicoli, 56, to several attempts to combine with Warner Music as a way to reduce costs.

He has been trying since 2000 to buy the world's fourth-largest music company. The combined company would have a quarter of the market, moving ahead of Sony BMG Music Entertainment to rank behind Vivendi SA's Universal Music Group.

The European Court of First Instance in Luxembourg on July 13 threw out EU regulators' approval of the merger that created Sony BMG in 2004.

The court said the European Commission, the EU's Brussels-based antitrust regulator, hadn't met the required legal standards and had only carried out "an extremely cursory examination" of the effects of the merger. The court ordered the regulator to review the transaction again.

The European Commission will rule on the creation of Sony BMG by March 1, a commission spokesman said on Jan. 31.

EMI and Warner dropped efforts to merge in 2000 after regulators opposed the plan. EMI's attempt to buy Bertelsmann AG's BMG unit in 2001 was also stymied by regulators. EMI again failed to combine with Warner in 2003, when a group led by Bronfman won the bidding for Time Warner Inc's music unit.

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