View Full Version : EMI turns tables on Warner Music in takeover battle

06-28-2006, 03:31 PM
EMI Group Plc raised its offer for Warner Music Group to US$4.6 billion and rejected a counterbid from the US company, intensifying a six-year struggle to create the world's second-largest record label.

Shares of London-based EMI jumped to a four-year high. EMI turned down a 320 pence-per-share (US$5.82) offer from Warner, saying its US$31-a-share bid for New York-based Warner was a "far superior" proposal, the company said in a PR Newswire statement yesterday. Warner's offer valued EMI at 2.53 billion pounds (US$4.6 billion).

EMI Chairman Eric Nicoli has tried for six years to buy Warner, whose musicians include Madonna and James Blunt. The combined company would have a quarter of the market, ranking behind Vivendi SA's Universal Music Group. Nicoli and Warner Chief Executive Officer Edgar Bronfman Jr are seeking to merge as piracy and illegal downloading hurt sales.

"There appears to be a real power battle between the two to determine who exactly is going to be in control of any merged company," said Henk Potts, a fund manager at Barclays Stockbrokers in London, which has US$45 billion in assets. "It is clear that it makes an awful lot of sense for them to combine. It would help them compete globally and give them scale."

EMI shares climbed as much as 27.25 pence, or 9.6 percent, to 311 pence, their highest since May 2002, and traded at 309.75 pence at 10:14am in London. Warner shares, up 28 percent this year, fell 29 US cents on Tuesday to US$27.23, valuing the company at US$4.04 billion.

The flurry of offers began in May, with EMI's bid of US$28.50 in cash and stock for Warner.

Warner proposed buying EMI for 315 pence in cash on June 14, EMI said yesterday. EMI said it rejected the bid as "wholly unacceptable."

EMI said yesterday it raised the previous offer for Warner to US$31 a share in cash. EMI would fund the proposal with debt, a share sale and selling some music publishing assets, the company said. Warner rejected that offer and made its most recent counterbid late on Tuesday. "It would make sense for them to come together, instead of going through this strange bidding and counterbidding situation, and work out a peaceful solution," said Potts at Barclays.

The companies abandoned efforts to merge in 2000 after regulators rejected the plan. EMI lost again when it was trumped by Bronfman in a 2003 auction held by Time Warner Inc. EMI's attempt to buy Bertelsmann AG's BMG music unit in 2001 was also stymied by regulators.

EMI has long been strong in the UK, while Warner is known for US acts including Green Day and the Red Hot Chili Peppers. In the US last year, Warner had a 17.3 percent market share to EMI's 10.4 percent, according to Nielsen Soundscan.

Warner Music's market value soared since Bronfman, 51, and investors including Thomas H. Lee Partners LP and Bain Capital LLC paid US$2.6 billion to buy the company. The group took the company public last May, selling shares at US$17 each.

06-28-2006, 03:34 PM
these two companies want to merge but both want to be in control if the merger goes ahead they will be able to challenge universal big time and if they are irv and the inc's employers then this could be good news for them

06-29-2006, 07:46 AM
yea deffo
id rather warner be in charge than EMI though!

06-29-2006, 02:26 PM
i think warner should be the one who buys EMI

they will be bigger then Sony/BMG

06-29-2006, 02:32 PM
Well EMI only have control of european markets while the US is the important one

06-29-2006, 03:26 PM
JD is the President @ Virgin Records Urban Music Department , i hope I.G can overlook all the Urban Music Departments @ Warner/Emi

i hope they merge , and give IG the Supreme Position as President of all urban music @ Atlantic , Priority , Virgin , Warner Bros Rec