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Last Updated: Wednesday, 21 February 2007, 20:40 GMT
Warner planning cash bid for EMI
Robbie Williams is one of EMI's artists
EMI has been disappointed by sales of artists including Robbie Williams
Warner Music has said any takeover bid for UK music group EMI is likely to be "solely in cash".

The comments from Warner - the world's fourth-largest music company - came a day after it announced that it had approached EMI about a possible bid.

EMI, which has issued two profit warnings this year, is the world's third-largest music group with artists such as Coldplay and Robbie Williams.

Both are battling a drop in physical music sales as downloads increase.

The two companies have also suffered as their artists have produced fewer hits recently.

However on Tuesday, EMI said that "no proposal" existed for its board to consider.

Offer price

Analysts have suggested that EMI is unwilling to hold discussions with Warner as the firm rejected a 320p a share offer last month.

A man silhouetted as he leaves an EMI building

Latest forecasts predict Warner will table an offer around the 260p a share level - EMI shares closed at 241.5p on Wednesday.

The latest approach continues the seven-year battle in which both firms have tried to acquire the other.

On Tuesday, Warner said it had approached EMI on 24 January regarding a deal, and saw "compelling strategic, commercial and financial logic" in a tie-up.

A merger of the firms would create a firm with about 25% of the global recorded music market, according to the International Federation of the Phonographic Industry (IFPI).

Attempts to merge EMI and Warner Music go back to 2000. Last year both companies made attempts to buy the other, but the moves collapsed following regulatory fears.

Analysts say the same regulatory issues could arise again.


However, Warner has also said that it now has the support of Impala - the trade group for independent music labels that has opposed previous deals between the majors.

Industry watchers say that winning Impala's backing is a good move as it could help to dispel any criticism of the deal.

The European Commission annulled approval of the merger between Sony and Bertelsmann BMG last June, and soon after EMI and Warner ceased talks.

The European Commission is now looking once again at the Sony-Bertelsmann deal, which industry players will be closely watching.

Moves to consolidate the industry have increased as firms selling physical music have suffered lower sales with consumers accessing music in other ways, notably over the internet.

Last week, EMI said that profits for the year to March would be "significantly" below expectations, its second profit warning for the year.

EMI receives Warner bid approach
20 Feb 07 |  Business
EMI shares fall on profit warning
14 Feb 07 |  Business
Weak album sales hit Warner Music
08 Feb 07 |  Business
EMI shares fall as executive goes
12 Jan 07 |  Business

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