EMI/Warner Music: Dead Deal ... For Now
July 27, 2006 at 6:25 AM (PT)
EMI GROUP PLC has announced that it is dropping its $4.6 billion bid for WARNER MUSIC GROUP "for the time being."
The WALL STREET JOURNAL reports that the decision follows a EUROPEAN Court ruling critical of the SONY MUSIC/BMG merger that effectively "clouds the already murkey waters" surrounding such deals. However, EMI did leave the door open a bit for future consideration, saying, ''The board will review this position in the light of future developments.''
The companies have been attempting to purchase each other since MAY, with each company making two offers. WARNER's board rejected EMI's most recent offer - despite the fact that it was almost double the price paid by a group of investors for WARNER MUSIC in 2004 - due to concern about the legal ramifications of the deal, while EMI criticized WARNER's most recent $4.67 billion offer as inadaquet.
While merging the music businesses of EMI and WARNER would save an estimated $400 million a year, both companies have expressed confidence that they are able to operate successfully as independent entities.