EMI And WMG Confirm A Takeover Bid Was Made
February 20, 2007 at 5:45 AM (PT)
EMI has confirmed what ALL ACCESS reported yesterday (NET NEWS 2/19): It has received a bid approach from U.S. rival WARNER MUSIC. Analysts have speculated that EMI would receive a fresh takeover approach after it issued two profit warnings in just five weeks. But they also say that a fresh attempt to tie up with WARNER MUSIC could run into the same regulatory problems that stymied previous attempts.
EMI and WARNER MUSIC first tried to merge in 2000 and again in 2003. Last year, they were locked in a $4.6 billion battle to buy each other, but hopes of a deal were quashed in JUNE when a EUROPEAN court annulled approval of the 2004 merger of SONY MUSIC and BERTLESMAN's BMG.
That ruling cast doubt on whether EMI and WARNER MUSIC would get regulatory clearance, and the companies abandoned talks until there was more clarity from antitrust regulators.
"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 standalone value and the value creation available from a combination," EMI said in a statement.
WMG Issues Statement
In response to the information released by EMI, WARNER MUSIC said in a statement, "WARNER MUSIC GROUP CORP. confirmed today, in response to EMI GROUP's announcement, that it has approached EMI about a possible acquisition of the entire equity of EMI.
"WMG approached EMI on JANUARY 24, following WMG having obtained the agreement of the INDEPENDENT MUSIC PUBLISHERS & LABELS ASSOCIATION (IMPALA) to provide full and complete support for the acquisition of EMI by WMG before the EUROPEAN COMMISSION and other relevant regulatory authorities in light of commitments to enhance competition and market access.
"WMG believes that there is a compelling strategic, commercial and financial logic in a combination of the two companies and that such a combination should maximize benefits for the shareholders of both companies. WMG's approach to EMI, however, remains in the preliminary stages, and there can be no certainty that the discussions will result in any specific transaction."