Warner's music to EMI's ears

LONDON: Britain’s EMI Group is keen to discuss valuations with bid target Warner Music Group, but will not pay as high as $5.6bn, a source close to the company said on Friday.

The Times newspaper said earlier on Friday, in an unsourced report, that New York-based Warner Music would consider selling itself for around $37.5-38.0 a share, or about $5.6bn. “EMI has for some time been keen to discuss valuation with Warner, but clearly believes $38 is a completely unrealistic valuation for a company that was trading at $21 in March,” the source said.

“On a comparable basis, $38 would value EMI at 475 pence per share.” EMI and Warner Music, which are locked in a battle to take over each other, declined to comment on the Times story.

Warner shares opened barely changed at $29.2 on the NYSE. At 1330 GMT, EMI shares were up 3% at 310p, after touching a 4-year high of 314p in early trade. London-based EMI, home to Coldplay and Robbie Williams, kicked off the latest move in a long-running quest to tie the two firms together in May, when it made a $4.2bn approach to Warner Music that was immediately rejected.

Warner Music, the group behind Madonna and Red Hot Chili Peppers, countered with a £2.5-bn ($4.6bn) bid for EMI. The British firm rejected that offer at the same time as making an improved $4.6bn bid for Warner Music that was also turned down.

The firms have been jostling for years to combine to create a rival on a par with majors Universal Music, owned by French conglomerate Vivendi, and Sony BMG, a joint venture between Japan’s Sony and Bertelsmann.

A merger attempt in ’00 was rejected by European antitrust regulators and EMI lost out to Warner Music’s current ownership when Time Warner sold it in ’03. The Times newspaper also said in its report that Warner Music was considering an improved £2.7-bn, or 340-pence-a-share, bid for EMI.

But sources close to the matter played this down too. “It’s not in either side’s interest to talk up bids,” one said. Both sides are still reviewing their options and could yet raise their offers over time, the sources said. The Times said EMI’s board believed their company was worth closer to 400p a share.