That EMI Group confirmed on Friday that it has rejected Warner Music Group's latest takeover offer. As expected, Warner offered its London based rival 260p a share, somewhat down on the 320p a share it offered last year, but a reflection of EMI's stock exchange performance since its current financial woes became clearer at the start of the year.
In a statement to the London Stock Exchange, EMI said its board had met to consider the offer on Friday but had decided it was "inadequate". Continued doubts that an EMI Warner merger would get approval from European regulators was also cited as a reason to reject the bid. The company said its board felt it was "not in the best interests of EMI shareholders to entertain a pre-conditional offer which would entail prolonged regulatory uncertainty and unacceptable operational risk at a critical time for the Company".
Of course, and as reported ad infinitum, EMI's concerns about whether or not European regulators will approve a merger between it and Warner follow that European Court ruling last summer which overturned the European Commission approval given to the Sony BMG merger in 2004. EC commissioners who are now re-reviewing the Sony BMG merger have said they need to undertake a more thorough investigation and won't report back until July.
As also previously reported an awful lot of late, Warner have moved to alleviate those fears of potential regulatory problems for their EMI takeover ambitions by reaching an agreement with IMPALA, the independent record label trade body, whose opposition to the Sony BMG merger led to the European Court ruling. But EMI remain cautious regarding the regulatory challenges of a merger with Warner - especially given that some key independent record labels - in particular Ministry Of Sound - have spoken out against the IMPALA/Warner deal and vowed to fight any major label merger regardless. More on which in a minute.
Of course cynics might argue that the EMI board are overplaying the regulatory risks of pursuing an EMI Warner merger, which would surely not be good news for the EMI board itself, many of whom would surely not be offered a job in an Edgar Bronfman Jr led EMI Warner (nor especially want one, for that matter). In fact, for those within EMI keen to resist a Warner takeover, and keen to persuade their shareholders that selling to Bronfman Jr would not be a good idea, the fact Ministry Of Sound are making the IMPALA/Warner deal less clean cut is presumably great news.