Talking of long running stories, back to this one now. The Daily Telegraph has reported that Warner Music has hired Wall Street banker Alan Mnuchin of AGM Partners to assess the possibility of a last minute bid for London based EMI.
As much previously reported, Warner is one of a number of parties who have expressed an interest in acquiring their rival record company, and with EMI's board open to offers have had access to the UK major's books in a bid to assess the commercial viability of a merger. However since then, of course, the EMI board have given their backing to a takeover offer by European private equity outfit Terra Firma, who have made an offer to the company's shareholders in a bid to gain complete control of the music firm.
Nevertheless, many in the city still expect a counter-offer from Warner, and many feel that large institutional shareholders in EMI are holding off reaching a deal with Terra Firma hoping a Warner offer will be forthcoming, and will kick off a bidding war. Mnuchin is expected to work with Warner's principal advisors, Goldman Sachs and Lehman Brothers, in a bid to make a final decision as to whether or not to bid at this stage.
Terra Firma are now expected to extend the deadline for EMI shareholders to accept their 265p per share offer to 26 Jul. Of course, this is not the first time Terra Firma, who still only have agreements in place to gain 3.5% of the company, have extended that deadline, though some insiders say it could be the last.
Even if the Terra Firma deal was to fall through, insiders say the EMI board remains unlikely to back a Warner offer, partly because of concerns over the costly challenge of securing approval from EC competition officials for the merger, and partly because a Warner takeover would certainly result in certain key members of the EMI management team being replaced. That said, city experts say that if Warner were to go up to 300p a share in its offer it would be hard for the EMI board to refuse.
Some still reckon Warner would rather the Terra Firma deal go ahead, enabling it to mount a new takeover bid with just one seller in the near future. Though Mnuchin's appointment suggests Warner bosses are yet to make a decision one way or the other.