EMI 'to table £2.4bn bid for Warner Music'

Quoted from: http://breakingnews.iol.ie

'07/05/2006 - 10:29:06

Music giant EMI was said today to be preparing a new £2.4bn takeover bid for Warner Music that it hopes will be more in tune with the wishes of its board.It is probable that EMI will table an offer that consists mainly of cash and a smaller number of shares than its original £2.31bn approach which was rebuffed by US rival Warner, according to the Sunday Telegraph.But the firm is not expected to make an approach immediately and another report said major shareholder Schroders was unhappy with any deal that would dilute its stake or lead to a rights issue to finance the bid, although other institutions were thought to be supportive.EMI chairman Eric Nicoli has so far failed to capture Warner Music on three occasions even though analysts feel a marriage of the two record labels is compelling, with cost savings likely to be as high as £210m.The EMI board believes that Warner’s three private equity shareholders – Bain & Co, Providence and Thomas H Lee – are inclined to sell out but are waiting to see an improved offer, the Sunday Telegraph reported.But analysts have noted that Warner boss Edgar Bronfman Jnr has not ruled out making a counter-bid for London-based EMI.This could prove difficult as Mr Bronfman would have to find more than $6bn in funding to acquire EMI and pay off his private equity backers.A combination would create the world’s third largest music company behind Universal Music and Sony BMG, bringing together artists such as Coldplay and Robbie Williams in the EMI stable with Madonna in the Warner camp.Regulators are expected to look favourably at a deal involving EMI and Warner because of the changing nature of the music industry, including the growth of digital downloads.EMI, which is worth £2.2bn, has enjoyed improved fortunes lately with revenues up 4% in the year to March 31 after digital music sales soared and the likes of Coldplay, Gorillaz, Robbie Williams and The Rolling Stones staged successful album launches.The company is expected to post a profits rise of 12% at its annual results on May 23.EMI has said both its record label and publishing arm, which sells music rights to film and television makers, outperformed the global industry last year. '