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Sunday, 23 January, 2000, 17:37 GMT
EMI and Warner set to merge

Come together: Madonna and Robbie Williams

EMI has confirmed it is in talks with Time Warner to merge their music divisions, creating the world's largest music company.

The details of the deal will be released on Monday before the London Stock Exchange opens, EMI said in a statement.

The company would unite artists like The Spice Girls, Madonna, Robbie Williams and the Rolling Stones - and hits might be made available on the internet.

EMI said the new operation would have a "50-50 joint venture structure" and would not involve an offer for EMI shares.

The deal would "create very considerable value for shareholders of both companies", it added.

The EMI confirmation follows earlier newspaper reports that it was set to merge with Warner Music Group, the Time Warner subsidiary.

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The merged company will be called Warner EMI Music and will have sales of 5bn a year, reports in the Sunday Telegraph and Los Angeles Times said. Reports value the merger at 12bn.

Web sales

The merged company will not only have the strongest music catalogue in the business, but also the ability to sell it on the internet, thanks to Time Warner's recent merger with AOL.

Many music industry experts expect that music will be downloaded from the internet in the future. This should allow record companies to increase profits by delivering products directly to consumers via the internet.

Mick Jagger EMI artists include the Rolling Stones

Late last year, EMI said that it expected about 10% of its sales to be made via the internet within five years. In 1998, music bought via the internet accounted for just 0.5% of global music sales.

EMI has been seen as a takeover target since it was demerged from Thorn, the television rentals business.

It is the world's last major free-standing music group. Many of its rivals are owned by larger media companies.

More recently, speculation had centred on a takeover from German media group Bertelsmann.

Already speculation exists the merger could produce annual cost savings of 500m for the two companies. Between them, they have overheads of more than 3bn a year.

Leading acts

The merged company will also have the financial muscle to market its leading acts heavily.

EMI artists include the Spice Girls, the Rolling Stones and Robbie Williams. Warner Music's artists include Cher, Eric Clapton, Phil Collins, Madonna and Fleetwood Mac.

The new company would have Time Warner's Atlantic, Elektra and Warner Brothers records labels.

EMI brings the Virgin, Priority and Capitol record labels.

Executive moves

Merger talks between Warner and EMI are understood to have started long before they did between Time Warner and AOL.

As part of the deal, EMI chairman Eric Nicoli is expected to move aside for a Warner executive. Mr Nicoli joined EMI from United Biscuits last year.

EMI chief executive Ken Berry is expected to become overall chief executive of the company.

EMI's shares closed down 6.6% on Friday at 648 pence.

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This could be the last time

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