EMI aims to revive Time Warner merger

Click to follow
The Independent Online

Britain's biggest music group, EMI, was forced into an embarrassing climbdown yesterday when it called off its $20bn (£14bn) merger with Time Warner's music division rather than face an almost certain veto from the European competition authorities.

Britain's biggest music group, EMI, was forced into an embarrassing climbdown yesterday when it called off its $20bn (£14bn) merger with Time Warner's music division rather than face an almost certain veto from the European competition authorities.

EMI insisted the deal to create the world's largest music empire was not being abandoned. It plans to put a fresh package of concessions to the European Commission towards the end of the year in the hope of winning approval.

The decision came on the day the European commission's advisory committee on mergers was due to hold its final meeting on the deal. But EMI was unable to table its full package of concessions in time for them to be considered, making a rejection almost certain.

"Basically the deal had run out of time," said a source close to the negotiations. "The withdrawal process is a way of buying more time." EMI tried to put a positive gloss on the U-turn saying it would continue discussions with Time, the commission and other regulators.

The collapse of the deal marks the end of a nine-month marathon for EMI. The merger was announced back in January though the City was always underwhelmed by its merits. The principal concern was that EMI was surrendering management control to Time Warner in return for a 100p per share special cash payment.

Eric Nicoli, EMI's chairman, said: "The withdrawal of our application allows additional time to reassess regulators' concerns and to pursue solutions simultaneously in Europe and the US. ... The business is in good shape and we will continue to drive it forward." EMI said any new agreement would require fresh shareholder approval. EMI now faces an uncertain future while it attempts to renegotiate the Time Warner deal, and rival bids from other music companies such as Germany's Bertelsmann could emerge. "I would have thought EMI is in limbo for a while now," said Lorna Tilbian, media analyst at WestLB Panmure.

Some of EMI's institutional shareholders expressed concern about the mounting advisory fees which could now be reaching more than £100m. "EMI may have made the fees outcome-related. I hope so," one senior fund-manager said.

The EMI-Warner Music deal stumbled on the European Commission's concerns that it would give the combined group an unhealthy dominance in the global music market and reduce the number of major record companies from five to four.

The deal would have put together EMI's stable of artists which includes the Rolling Stones, the Spice Girls and Janet Jackson, with Warner Music's Fleetwood Mac and Phil Collins.

Comments