EMI, WMG courtship continues

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LONDON -- The on-off romance between EMI and Warner Music Group has flickered back to life, with the London-based major confirming Tuesday that it has received an approach from WMG.

In a statement issued to the London Stock Exchange, EMI said: "Further to recent press speculation, EMI Group Plc. confirms that it has received an approach from Warner Music Group. There is, however, no proposal currently for the EMI board to consider."

As of Tuesday, there were no details available about whether the WMG approach relates to a merger or a takeover.

"There can be no certainty that this approach will lead to any proposal or offer being made for the company," the EMI statement said. "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 stand-alone value and the value creation available from a combination."

According to EMI, "further announcements will be made if and when required." A statement from Warner Music Group was expected by today.

In the wake of the news, early trading on the London Stock Exchange saw EMI's stock climb from 221.5 pence ($4.32) to 241.75 pence ($4.71) before settling at 234 pence ($4.56), up 5.64% on the previous day's closing figure. On Feb. 14, EMI's stock had tumbled to 210.75 pence ($4.10) in the wake of the company's second profits warning of 2007.

The Feb. 14 statement had warned that profits for the financial year ending March 31 would be down on the previous year and predicted that EMI's recorded music sales would be down some 15% on a constant currency basis. EMI Group's annual financial results are due May 23.

The WMG approach is the latest in a series of attempts by either of the music giants to acquire or merge with the other. The companies had attempted to merge in 2000, but abandoned the move in the face of concerns about market dominance expressed by the European Commission. In November 2003, EMI made a bid to acquire Warner Music, but withdrew after the emergence of a second, ultimately successful bid by a group of investors led by Edgar Bronfman Jr.

May and June 2006 saw further counterbids by both companies to acquire the other, although all bets seemed to be off in July last year when the European Union's Court of First Instance annulled the EC's July 2004 decision to approve the merger of Sony Music and BMG. The Warner/EMI initiatives were subsequently shelved. Any Warner/EMI merger or acquisition would require EC approval. The regulator will decide by March 1 whether to clear the Sony BMG merger or launch a new probe into it.

Tom Ferguson is deputy global editor at Billboard.
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