Warner in new approach for EMI

Warner Music was today reported to be lining up its latest bid attempt in the battle for troubled rival EMI.

Warner Music was today reported to be lining up its latest bid attempt in the battle for troubled rival EMI.

Warner, which has repeatedly tried to merge with the record group behind artists such as Coldplay and Norah Jones, is said to be examining EMI's books, according to the Financial Times.

Private equity firms Fortress, Cerberus and One Equity are also looking at EMI's figures. They are expected to make an offer by the deadline on May 23.

EMI announced on May 4 that it had received a number of "preliminary indications of interest to acquire the company" with One Equity speculated to be considering a $6bn (€4.4bn) approach for the group. EMI has a current market valuation of £1.97bn (€2.87bn).

Warner Music, which boasts artists such as Madonna and the Red Hot Chili Peppers, and EMI made two approaches for each other last summer as both groups struggled with falling sales amid the takeoff in digital music downloads.

But both groups were thwarted when a European court judgment cast doubt on whether regulators would allow further consolidation in the music industry.

Warner made a fresh approach for EMI with a conditional proposal of 260p a share earlier this year following a profits warning from EMI.

In addition to the impact of digital downloading, EMI has been hit by weak markets in the US which saw sales in the music division fall by around 15% in the year to the end of March.

EMI is tackling the current sales crisis with a £110m (€160.8) restructuring programme, including savings from the removal of layers of management.

In its last trading update in April, the firm said it has already carried out the majority of the actions, with an estimated £70m (€102.3m) of savings due to be achieved by the end of next March.

EMI also has a music publishing division, which until recently was the largest in the industry, and manages a catalogue of artists including Sting and James Blunt.

If EMI does not receive a high enough bid it is expected to press ahead with a securitisation of the publishing arm, to help refinance the business as well as defend it against a possible takeover.

On top of regulatory issues concerning a tie-up between Warner and EMI, digital rights protection could also serve as a potential barrier after EMI agreed to drop the copyright protection for songs sold on Apple's iTunes and other similar music retailers.

However, Warner is against such a move and has criticised EMI's decision.

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