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EMI Shares Rise on Rumor of Sale Talks

November 24, 2005|From Times Staff and Wire Reports

Shares in the nation's fourth-largest record company, EMI Group, gained 10% on Wednesday in heavier trading than usual, lifted by fresh but unconfirmed speculation of a takeover at about $5.17 a share.

EMI, home to such artists as Coldplay, the Rolling Stones and Robbie Williams, declined to comment on the speculation that either Universal Music Group or Warner Music Group was in merger talks with the London-based company.

Shares in EMI closed at 242 pence ($4.17) on the London Stock Exchange, putting the company's value at about $3.27 billion. But the stock is still off its 52-week high of $4.83 in February.

The stock was trading well below the rumored acquisition price of 300 pence ($5.17) a share, suggesting some skepticism by investors that a deal was imminent.

Turnover in the stock was 44.5 million shares, or more than four times the average daily volume of around 10 million shares.

Traders said a merger with global leader Universal Music, owned by France's Vivendi Universal, was unlikely because it would trigger competition worries by creating a company with too much control of the market. Sources at Universal Music said that Vivendi was not in talks with EMI and that any proposed acquisition probably would not win approval from European regulators.

Traders added that a merger with New York-based Warner Music was more likely but still much in doubt. Sources at EMI and Warner Music said this week that the companies were not in talks.

Analysts have speculated for years that Warner Music, home to acts such as Madonna and Green Day, and EMI would merge their recorded music units, with Warner shedding its music publishing business to appease likely regulatory concerns.

The two firms have come close to merging three times in the last eight years. The European Commission blocked a deal in 2000, saying the combination would impair competition in the music industry.

Some onlookers hope that regulators might now be more forgiving because the record industry has suffered four straight years of falling or stagnant sales. But regulators have not given any signal that their attitudes have changed.

Warner Music and EMI again pursued a merger in 2003, when Warner Music was owned by Time Warner Inc. The media conglomerate eventually sold the company to an investor group led by current Chief Executive Edgar Bronfman Jr. and private equity group Thomas H. Lee Partners. Warner Music went public in May at $17 a share.

Warner Music's stock price has failed to appreciate considerably since then, closing Wednesday at $17.86, up 25 cents.

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