EMI is reportedly proactively courting potential buyers by opening its books to those who have expressed an interest in acquiring the major label so that they can conduct due diligence.
As previously reported, the London based major confirmed earlier this month that it has been approached by a number of potential bidders, and the Telegraph reported last weekend that two hedge funds were preparing formal bids to buy the struggling major, which has been a takeover target for over a year now, and more so since it admitted disappointing financial performance at the start of the year.
Yesterday The Guardian reported that EMI was making its books available to all of those who have expressed an interest in buying the company. The strategy seems to be to encourage a number of different players to concurrently formalise their interests in taking over the firm, creating a bidding war and pushing up the asking price.
The Guardian quoted one industry source as saying: "The significant aspect of this is EMI was in a cat and mouse game with all the potential buyers. Now it has initiated a formal process to sell the company".
The same access to financial information is believed to have been given to Warner Music, who are reportedly considering competing with the private equity types in yet another attempt to acquire EMI and create another major major of similar size to Universal Music and SonyBMG.
As previously reported, the private equity types are reportedly planning on putting in bids lower than Warner's most recent bid, 260p per share, mainly because unlike Warner they can't budget on make savings on their existing operations in order to help fund the purchase. Which means that even if EMI do get a bidding war going, there's a chance Warners bid will still come out highest.
Of course a Warner bid comes with the risks of falling foul of EC regulators who might oppose an EMI/Warner merger, though Warner will hope that the risk of that is down because of their previously reported and slightly controversial pact with indie labels trade body IMPALA, who are normally the most vocal opposers of major label mergers, but who have said they won't oppose a Warner purchase of EMI.
Of course regulatory concerns won't be the only reason for EMI's top guard to want to go with a private equity bid over a Warner merger. Private equity types may well keep the recently revamped exec structure in place post-takeover, whereas Warner would be sure to want to integrate operations and kick out some of the top EMI types. But if EMI's shareholders are presented with a number of competing bids, and the highest still comes from Warner, who are proclaiming to have overcome the regulator problem, then it might be hard to turn that offer down, even if it doesn't have the support of the EMI board.
All things considered, CMU's 'major label mergers' file may as yet get a bit thicker.