BMG/Warner tie-up faces final hurdle

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The Independent Online

Warner Music and its German rival BMG could unveil a long-expected merger within days if their parent companies can resolve a final dispute over the value of their stakes in a combined business.

But sources close to the talks last night insisted the outcome was still far from certain, leaving open the possibility that EMI could still gatecrash the talks at the last minute. EMI raised more than $200m (£124m) in the bond markets earlier this month, fuelling speculation that the UK group might try to revive merger talks with Warner Music.

The US media giant AOL Time Warner and Germany's family-owned group Bertelsmann have been in talks about merging their music divisions since May. A merged group would have a combined market share of just over 20 per cent, ranking just behind Universal Music and relegating EMI to last place among the music majors behind Sony.

The talks are understood to have stalled over the valuation of the two music companies. In order to achieve a deal that would leave both AOL Time Warner and Bertelsmann with a 50 per cent stake in the merged group, the US group is believed to be asking Bertelsmann for $150m cash. Bertelsmann is understood to be prepared to pay up to $100m.

AOL Time Warner and Bertelsmann declined to comment on the reports last night. The AOL Time Warner board is due to hold a meeting today that is set to consider dropping AOL from the company name.

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