Markets wait for EMI bidding war

EMI’s share price has risen on the back of speculation there will be a counter offer for the music group, although one reportedly interested party ruled itself out of the bidding.

EMI’s share price was riding above Guy HandsTerra Firma’s £2.4 billion ($4.8 billion, €3.5 billion) accepted bid, as the markets responded to rumours of two counterbids.

Warner Music is continuing due diligence with EMI’s broker Greenhill and it will not rule out a bid until this is completed, which may be as early as Friday, according to UK magazine The Business. The magazine said Warner may also consider teaming up with Terra Firma instead of tabling a rival offer, although Hands is believed to have ruled this out in private.   

Warner has been interested in EMI for a long time, tabling bids in 2000 and 2003 but it fell foul of the regulators both times. Last year they abandoned a merger following a European Court ruling on a similar deal between Sony Music and BMG.  In February Warner also bid for EMI for 320 pence per share, or £2.1 billion, but the bid was rejected.

A well-placed market source said: “If Warner do make a bid, shareholders will want a sizable premium because the deal will be heavily regulated and may fall through, which leaves Terra Firma in quite a strong position.”

Financier Andrew Regan’s Corvus Capital and former EMI executive Jim Fifield are also weighing an approach for EMI.

But Corvus said in a statement it has the “necessary funding” to mount a bid, although given Terra Firma’s recommended offer for EMI, it had no intention to make an offer for EMI. A well-placed market source said given the tone of the statement it is unlikely Corvus will make a bid.

The New York Post had reported earlier in the day that Corvus is preparing to back former EMI executive Jim Fifield in a 278p a share bid for EMI, 13 pence higher than Terra Firma’s recommended offer. The record company’s share price had risen to 277p yesterday on the back of the speculation and despite Corvus’ negative statement the shares were settled 7 pence above the bid price at £2.725 at 09.49 GMT.