I love the way the business press always illustrate stories involving EMI's merger ambitions with a picture of Robbie, Kylie or Chris Martin, depending on who has the highest profile at the time. Wouldn't it be great if that's what it was really like? Robbie, Kylie and Chris around a table in Brook Green, with Eric Nicoli, going through the fine details of Warner's proposed takeover, while Edgar Bronfman Jnr calls conference with Billie Joe Armstrong, Sean Paul and James Blunt to discuss EMI's proposed deal. Edgar would probably sit in a large chair in front of a big video wall, with a different artist tuned in to each screen - Bond villain like. Have you noticed how much Edgar Bronfman Jnr looks like a Bond villain?
Anyway, I'm digressing a bit. EMI and Warner were in the news again yesterday as merger talks between the two majors continue. Well, rather, merger non-talks are continuing. The boards of the two major record companies have both rejected takeover proposals from the other. Twice. London based EMI yesterday confirmed that New York based Warner Music had turned down its latest acquisition proposal, while at the same time proposing a takeover of EMI. EMI's board, in turn, had almost immediately turned that proposal down.
In a statement to the city, EMI revealed that both they and Warner had now made two recent offers to acquire the other. As widely reported at the time, EMI made its initial unsuccessful offer of £2.31 billion to buy Warner Music on 3 May. Warner Music then responded with a bid to buy EMI for approx £2.46 billion, which EMI promptly turned down. EMI's second bid offering about £2.5 billion was also knocked back by Warner, who in turn offered £2.49 billion in a revised offer - rejected by EMI's board this week.
In their statement, EMI said yesterday: "The Board of EMI has unanimously rejected the revised alternative proposal from Warner Music... and considers it to be wholly unacceptable, having regard to EMI's prospects, the potential synergy benefits of a combination of the two companies and the range of strategic options available to EMI".
They continued: "The Board of EMI continues to believe [our recent offer to Warner Music] would be very attractive to both sets of shareholders and would deliver value to EMI's shareholders which is far superior to Warner Music's revised alternative proposal. The Board of EMI is committed to pursuing such a transaction only if it delivers enhanced value and earnings accretion to EMI shareholders."
What all this means re the possibility of an EMI Warner merger is not clear, and any comments on that issue would be pure and pointless speculation. Here goes. It remains likely that Warner's shareholders would accept an EMI offer if only the price was right. EMI boss Eric Nicoli, though, seems unlikely to support a Warner takeover whatever the offer - he being in bullish expansion mode just now, and not wanting to accept a deal which would almost definitely require him to take, at the very least, a back seat role at any merged enterprise. Of course Edgar Bronfman Jnr also seems quite happy sitting at the top of the Warner Music Group, and would possibly also try to block any takeover that would affect his powerbase in the music business, though, with a team of financial backers keen to cash in on the investment they made when they bought Warner Music off Time Warner, he surely has a contingency plan should EMI make an offer that is just too good to refuse - possibly the previously reported plan for Bronfmann Jnr to keep and then expand Warner's publishing division (which EU officials would probably force EMI to sell in any takeover) - a possibly attractive scenario given that music publishing seems to be an increasingly profitable and vibrant sector to be in. Though, all that said, some reckon that as takeover talks become prolonged in this way, the merger itself actually becomes less likely. Time will tell I guess.
As an aside, while checking something out about this story I noticed that the links box on the main Warner Music Group website lists the UK labels as being Warner Music, East West and WEA London, all of which, I'm pretty sure, have long been sidelined or rebranded as Warner Bros and Atlantic. See, stuff like that wouldn't happen if Billie Joe was on the board.