Warner woos EMI ahead of EU competition ruling on merger

STRUGGLING music company EMI has confirmed that it received a fresh takeover approach from US rival Warner Music.

Ahead of a European competition ruling on a tie-up between music giants Sony and BMG, however, analysts said EMI acceptance of a Warner bid could lead to regulatory difficulties.

EMI, which has issued two profit warnings since mid-January, said there was as yet no firm proposal, and no certainty that the latest approach would lead to a formal offer.

EMI and Warner Music last year each tabled and rejected proposed takeover bids of about €3.72 billion for each other.

In July 2006, the pair said they would sit tight following a move by the European Union’s second-highest court to cancel the European Commission’s approval of the mega music merger, which was to create Sony BMG.

A combination of EMI and Warner would create the world’s third-biggest music company behind Universal Music and Sony, and would count Coldplay, Madonna, Eric Clapton, Eminem and Scissor Sisters among its artists.

The result of the Sony/BMG review is expected by March 1.

EMI said on Tuesday that it would look at any firm offer from Warner “with particular focus on ... the regulatory and operational risk profile”.

At the half-way stage yesterday, EMI shares were showing a gain of 5.53% to 233.75 pence, outperforming London’s second-tier FTSE 250 index, which was slightly down.

The announcement comes just days after the Observer weekly newspaper that EMI’s board was seriously considering either selling or demerging its recorded music division in a bid to reverse falling profits.