EMI, the ailing music group previously targeted by private equity, has received another takeover approach from rival Warner Music, as the two companies struggle to compete in a difficult trading environment.
In a statement to the stock market, EMI confirmed that it has received an approach from Warner but said “there is… no proposal currently for the EMI Board to consider.” It added: “There can be no certainty that this approach will lead to any proposal or offer being made for the Company.”
It has been a turbulent period for EMI, which has cut its forecasts twice in the last month and recently ousted its top two music executives following disappointing Christmas sales. The firm said last week it was suffering from an “unprecedented level of market decline”.
Yesterday Eclectica Asset Management, one of EMI’s shareholders, publicly criticised the company for its lack of transparency. In a letter to the board, Eclectica chairman Hugh Hendry said this was “creating valuation uncertainty and excessive share price volatility.” Hendry wants EMI to appoint an investment bank to provide an independent valuation of its music back catalogue.
EMI and Warner have enjoyed a long courtship. The two firms unsuccessfully tried to merge in 2000 and 2003, but were prevented by regulators. More recently, the firms tried to buy each other last year, but abandoned the plan after a European Court ruling on the merger of Sony Music and BMG suggested the deal would fall foul of competition authorities. A combined group would have a market share of about 25 percent.
Buyout firm Permira also tried to buy EMI last year, but could not agree a price for the group.
At 12:00 GMT, EMI shares were up 5.3 percent to 233.25 pence, giving the company a market capitalisation of £1.87 billion (€2.77 billion; $3.64 billion).