Dow Jones say that EMI rejected Warner's "break-fee" offer last week because bosses there were not convinced the offer sufficiently covered the regulatory risk of pursuing an EMI Warner merger. Warner, of course, is still keen to merge with EMI and is increasingly confident it could get such a merger past EU competition regulators despite the current EC review of the SonyBMG merger (mainly because of their pact with pan-European indies trade body IMPALA). But EMI are still nervous about spending time and money on a merger and for it to then fail at the regulatory hurdle. Warner had made a break-fee offer, ie, a commitment that should merger talks falter at the EC approval stage it would pay EMI a sum of money to cover their costs to that point. However, insiders say EMI bosses didn't think Warner's offer was enough to cover its potential costs, which is one of the reasons they decided to back the offer to buy EMI by private equity firm Terra Firma (which has no regulatory issues) rather than further pursue a Warner deal. So, there you go.
May 29, 2007
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1 min read
EMI felt Warner break-fee offer insufficient
EMI reportedly rejected Warner's break-fee offer as insufficient to cover regulatory risk, backing Terra Firma's bid instead.