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EMI, the UK music group behind Norah Jones and The Beatles, on Friday said it had dismissed a “non-binding proposal” from Warner Music at 260p a share.
The latest twist in the protracted merger talks comes as the European Commission this week launched an in-depth investigation into the merger of Sony and Bertelsmann’s recorded music businesses.
Warner submitted its proposals on Thursday evening. EMI’s board met on Friday and quickly moved to reject the offer. It said Warner’s proposals – which would depend on regulatory clearance – were “subject to numerous assumptions and conditions”, adding that 260p a share was inadequate.
EMI and Warner have been trying to create a combined group since 2000. After several failed attempts, talks revived last year, but were in effect put on ice when a European court ruled that the European Commission had made “manifest errors” in approving the Sony-BMG deal in 2004, and ordered a new probe on competition grounds. A final decision is expected by July 2.
Warner declined to comment on the move, but people familiar with its plans said the US music group believed that if it has a merger agreement with EMI in place, it would be in a better position to influence the commission’s deliberations.
“The Commission is looking at Sony and BMG. It is a good chance to throw EMI and Warner in there so they can look at the music market as a whole,” said one person close to Warner.
However, one big EMI shareholder said the proposal was too conditional and vague for the board to accept. “They did the right thing. There is nothing concrete on the table,” he said.
Some shareholders are hoping that private equity investors will make a bid, not least because that would avoid regulatory obstacles.
The main opposition over consolidation of large music groups has come from independent record labels, which have been concerned that the combined groups would crowd out smaller music groups.
However, last month Warner struck a truce with Impala, which represents independent record labels, clearing the way for the US-listed group to make a bid for EMI.