EMI shares jump 10% on reports of offer
EmptyLONDON -- Shares of EMI Group jumped more than 10% Tuesday as the music giant told the stock exchange here that it has "received a preliminary approach" for the company.
The market statement, issued on the back of market speculation and U.K. press reports of a possible £2.5 billion ($4.9 billion) offer from private equity groups, said the approach "may or may not lead to an offer being made for the company."
EMI spokespeople in London and New York declined comment beyond the company's statement, but industry sources in New York said that there has indeed been sector talk about a bid by Goldman Sachs's private equity arm. There also was talk that the proposed bid included Kohlberg Kravis Roberts, an investor in VNU Group, the corporate parent of The Hollywood Reporter.
"We can't say anything more than is in the statement," an EMI spokesperson said.
Meanwhile, a spokesman for Warner Music Group, which had looked at acquiring EMI before tabling discussions due to regulatory concerns, declined comment on the situation. But sources said WMG will continue to focus on operating its business until the regulatory picture becomes clearer.
WMG is set to report its latest quarterly earnings Friday, followed by a conference call with chairman and CEO Edgar Bronfman Jr.
EMI's share price rocketed 10% to £2.90 ($5.64) in early trading Tuesday as news of the takeover approach filtered through the market. Shares in EMI closed down 61/2p at £2.62 by the end of play Monday night, putting the company's market value at £2.1 billion ($4.09 billion).
The EMI statement to the exchange said the company "noted the recent movement in its share price."
The stock has been volatile this year and recently moved down from a 52-week high of £3.14 established in July.
The market is abuzz with the view that EMI executive chairman Eric Nicoli is leading the talks that are billed as being at a very early stage.
Certainly, the issued statement confirms the talks are serious enough to require market transparency. However, it remained unclear how a deal may be structured. Sources suggested Nicoli and his team are looking for a management-led buyout, which would keep the executive suite basically intact. But one source said some private equity buyers may look to replace some of EMI's leadership.
There also was some chatter in New York about whether EMI could split up its music publishing and recorded music businesses and perhaps sell one of them.
With the October announcement of EMI Music Publishing chairman and co-CEO Martin Bandier's resignation (HR 10/31), there had been speculation in some quarters that Bandier was interested in acquiring the publishing unit he helped establish as the market leader.
EMI Group has been under scrutiny as a possible acquisitions target ever since the end of merger talks with WMG and its subsequent aborted effort to snap up Bertelsmann's music publishing assets, which were acquired by Universal Music Group.
EMI's roster of artists include Robbie Williams, Coldplay, Gorillaz and the Rolling Stones, while its music publishing arm is the largest in the industry and handles copyrights from such artists as Sting, Kanye West, the White Stripes and Jay Z.
Georg Szalai in New York and Chris Morris in Los Angeles contributed to this story.