Two U.S. Hedge Funds Reported Looking At EMI Bid
May 14, 2007 at 5:45 AM (PT)
U.K.'s THE TELEGRAPH reports two American hedge funds, FORTRESS and CERBERUS, are planning to team up to make a low-ball offer of less than 260p a share for EMI MUSIC GROUP. But the funds, which specialize in buying distressed assets, will have competition. Sources close to EMI say WARNER MUSIC re-entered the fray last week and is considering making a formal bid. It is understood WARNER has already informally told EMI's management that the 260p-a-share offer it made in MARCH is still on the table.
Sources close to the deal say FORTRESS and CERBERUS are planning to take a formal offer direct to shareholders next week, but only at a "significant" discount to the minimum 260p a share price being demanded by the company's management. The hedge funds are understood to believe that, because of the regulatory risks of a WARNER-EMI tie-up, they can under-bid WARNER.
The mega-merger that created SONY BMG has yet to receive anti-trust clearance from the EU nearly three years after the deal. The EUROPEAN COMMISSION has until JULY 2 to either approve the deal or reject it -- which would lead to a break-up. The decision is being closely watched by EMI, which would face similar scrutiny if it opted for a merger with WARNER.