Philips, the Dutch electronics group, said it was "evaluating various strategic options" with respect to its 75 per cent stake in PolyGram, causing Polygram's shares to shoot up by 12.4 per cent.
A spokeswoman for PolyGram said: "We embrace any strategic options which will maximise any long-term value for our shareholders as well as opportunities for our management team and their talent."
Analysts said the timing of the announcement suggested Philips was courting Seagram, the US entertainment company thought to be bidding for EMI.
City analysts believe there may also be interest from Disney or Dreamworks, two rivals of Seagram, which owns Universal Studios. Disney is known to have an interest in stepping up its music operations.
Bertelsmann, touted as a possible European buyer, is effectively ruled out on competition grounds.Reuse content