CORRECTION Key EMI investors still sees 'outside chance' of new Warner Music bid

CORRECTION Key EMI investors still sees 'outside chance' of new Warner Music bid

	Published : Mon, 15 Jan 2007 14:14 By : Agencies Print this Story

(Corrects to remove references to Time Warner, alters coding)

LONDON (AFX) - A major EMI shareholder believes there is an 'outside chance' that Warner Music Group will come back with an improved bid for the music company in the middle of the year should they get approval for a merger from competition authorities in Europe and the US.

Last year, EMI rejected a 2.54 bln stg bid from Warner Music and claimed its own 4.7 bln usd offer for Warner Music remained the best option for both sets of investors. Antitrust rulings are expected later this year.

Last August, a European Union court annulled a European Commission approval of the 2004 merger deal of Sony and BMG raising fears raising fears that the Commission might take a stand against further consolidation in the industry.

Standard Life Investments, which holds 2.6 pct in EMI, however said the market continued to be very 'sceptical on the ability of the new management to deliver'.

Over the weekend, it was reported that Eric Nicoli - who took on the role of chief executive following the group's profit warning last week - could be planning a buy-out. It has also been reported that the group is considering restructuring its debt, loading more borrowings on to its music publishing division in a move that could make the music company less vulnerable to a takeover by private equity.

David Cumming, head of UK equities at SLI, said: 'It's difficult to say anything positive about events at EMI - profit warnings, failed bids and pretty poor performance operationally. The balance sheet has got into a bit of a mess and it's had to take on more debt but I think it's the only thing they can do.

'So I think the shares are going to stay weak.'

Shareholders are now expected to meet the management in the coming week to seek an explanation.

Insight Investment, which is ranked the third largest shareolder in the group according to data from Thomson Financial, said: 'We will be meeting the company to get a better understanding of changes taking place.'

Tim Rees, director of UK equities at Insight, said: 'We are keeping an open mind. The music industry has changed considerably over the past few years and some of the old assumptions may be due for a change. So let's see what they (management) has to say.'

raji.menon@thomson.com

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