WMG interested in EMI — again

'Approach' confirmed, but no merger or buyout proposal

London — The on-and-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."

No details were available Tuesday 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," EMI 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 £2.22 ($4.32) to £2.42 ($4.72) before settling at £2.34 ($4.56), up 5.6% on the previous day's closing figure. On Feb. 14, EMI's stock tumbled to £2.11 ($4.11) in the wake of the company's second profit warning of 2007.

The Feb. 14 statement warned that profits for the year ending March 31 will be down from a year ago and predicted that EMI's recorded music sales would dip about 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 saw further counterbids by both companies to acquire the other, though all bets seemed to be off in July 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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