Terra Firma on cusp of £2.4bn EMI victory

Terra Firma is set to triumph in its EMI bid, as Warner Music looked increasingly likely to withdraw from the bidding.

US music business Warner Music is unlikely to make a formal bid for rival EMI, leaving UK buyout firm Terra Firma led by Guy Hands to proceed with its agreed £2.4 billion ($4.9 billion, €3.6 billion) takeover.

Warner and former EMI chief executive Jim Fifield have been given until this Thursday to put forward a bid under rules established by the UK takeover panel.

A source close to the company said “All the signs point to no bid coming out before the Thursday deadline. It’s the top of the mergers and acquisitions boom with unstable debt markets and the record industry as a whole is having a difficult time.”

The source said Warner would probably approach Terra Firma if it was successful to buy EMI’s coveted recorded music business, leaving the buyout firm with the music publishing arm.

Terra Firma’s £2.65 per share bid will then proceed if it secures shareholder acceptance. Shareholders had been reluctant to accept the buyout firm’s offer in case a rival bid from Warner materialised.

It had been thought Warner would need to stage a counter bid of around £3.00 per share to pre-empt shareholder worries about regulatory problems, which beset two previous attempted mergers of the two businesses in 2000 and 2003.