EMI rejects Warner takeover proposal
EMI has rejected an ‘inadequate’ £2 billion takeover proposal from Warner Music.
The company’s board said that the proposed offer is not in the best interest of EMI shareholders, given the ‘prolonged regulatory uncertainty’ that would ensue, not to mention ‘unacceptable operational risk at a critical time’.
It also believes that Warner has undervalued EMI, both in terms of the value of EMI itself and in terms of the synergies available from a combination’ with Warner.
Warner is offering 260p per share, which values EMI at £2.08 billion. The company’s share price currently stands at 236p.
Even if Warner does make a definite offer on the back of this proposal, the takeover is likely to be subject to a lengthy regulatory examination by the European Commission. Last year an EU court overturned the Commission’s decision to approve a merger of two of the other ‘big five’ record companies, Sony and BMG. That ruling is currently being appealed.