EMI shares tumble after European Court ruling
Shares in music giant EMI tumbled today after a European court ruling cast doubt over a possible trans-Atlantic merger with US rival Warner.
The European Court of First Instance annulled previous EU approval of a 2004 tie-up between Sony and BMG which created the second largest music company in the world behind Universal.
The ruling sparked fears in the City today that a combination of London-based EMI and Warner could also be blocked. The pair are currently locked in a takeover tug-of-war as both companies battle to take control of each other.
They were closely watching the Sony BMG case to assess how consolidation in the industry would be received by regulators.
EMI said today the judgment will require “detailed study” as its shares plunged more than 8%.
A merger between EMI and Warner would create the third largest music company in the world and would bring together EMI's stable of artists including Coldplay and Robbie Williams with the likes of Madonna and Red Hot Chili Peppers from the Warner camp.
The current takeover battle began in May when EMI tabled a bid worth £2.31bn (€3.35bn) which was immediately rejected by Warner.
In mid-June Warner approached EMI with a £2.5bn (€3.6bn) offer dubbed a “PacMan defence” after the computer game in which the hunter becomes the hunted.
But this was knocked back by EMI which said the offer was “wholly unacceptable” before it lodged a new bid for Warner worth £2.52bn (€3.6bn).
This was rejected by Warner and again Warner fought back with a £2.54bn (€3.7bn) offer, but this also failed to convince the EMI board.
Last week it was reported Warner was contemplating an improved £2.7bn (€3.9bn) bid. It came days after EMI was said to be preparing its own £2.6bn (€3.8bn) offer.
However, today’s ruling cast doubt over the chances of a tie-up and left both companies contemplating their next move.
