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Warner pulls out of EMI race

18/07/2007

Warner Music has announced that it does not intend to make a rival bid for EMI, which has already agreed to a £2.4 billion takeover offer from a private equity group.

However in a statement the US-based company, which has courted its British competitor for the past seven years, stressed that it reserved the right to reconsider its position if EMI received another bid further to the agreed Terra Firma offer.

British regulators had given Warner until today to decide whether to make a rival bid for EMI.

The company had said previously that it was considering making a further offer for the music group after its last bid of 260 pence a share was rejected by EMI in March.

Analysts had warned that Warner would need to significantly raise the offer in order to trump Terra Firma's 265 pence a share bid, agreed by EMI in late May.

They say it now appears the US music firm has decided that a takeover of EMI would prove to be too expensive, with the British company experiencing falling sales as the record industry struggles to cope with the shift from CD sales to the digital downloading of songs on the internet.

New figures released today suggest that Warner overtook EMI to secure the third-largest share of the global recorded music market in 2006.

Warner's market share rose to 13.8 per cent, while EMI's dropped to 13.6 per cent over the year, according to data produced by the Music & Copyright trade publication.

Universal Music held the top spot, followed by Sony BMG.

Bishop Cheen, an analyst at Wachovia Capital Markets LLC, said Warner were showing that they didn't want to "bet the ranch on an incredibly expensive expansion" by making a further bid for EMI.

"They are making a bet they don't have to have EMI to survive, to thrive, to prosper," Cheen added.




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