EMI Group, the struggling British music company, has said it has received a fresh takeover approach from US rival Warner Music. But ahead of a European competition ruling on a tie-up between music giants Sony and BMG, analysts said even acceptance by EMI could lead to regulatory difficulties.
EMI, which has issued two profit warnings since mid-January, said Tuesday there was no firm proposal for the board to consider and added there was no certainty that the latest approach would lead to a formal offer.
"Further to recent press speculation, EMI Group... confirms that it has received an approach from Warner Music Group," EMI said in a statement.
EMI and Warner Music had last year each tabled and rejected proposed takeover bids of about 2.5 billion pounds (3.7 billion euros, 4.9 billion dollars) for each other.
Later in July 2006, the pair said they would sit tight following a move by the European Union's second-highest court to cancel the European Commission's approval of the mega music merger which was to create Sony BMG.
A combination of EMI and Warner, meanwhile, would create the world's third-biggest music company behind Universal Music and Sony, and would count Coldplay, Madonna, Eric Clapton, Eminem and Scissor Sisters among its roster of artists.
"Warner looks increasingly like the natural home for EMI (but) a formal bid at this stage would face significant regulatory uncertainty as the outcome of the review into the Sony/BMG merger is unknown," Numis Securities said in a research note.
The result of the review is expected by March 1, while EMI said Tuesday that it would look at any firm offer from Warner "with particular focus on ... the regulatory and operational risk profile."
Warner's approach comes as EMI is battling against sliding sales of compact discs in the United States.
EMI last week said it expected revenue at its recorded music business -- EMI Music -- to show a decline of about 15 percent in the year to March 31 compared with the previous 12-month period.
That was its second profit warning in little over a month and led to EMI's share price slumping more than 11 percent to the lowest level since November, 2005.
At the half-way stage on Tuesday, EMI shares were showing a gain of 5.53 percent to 233.75 pence, outperforming London's second-tier FTSE 250 index, which was slightly down.
EMI's latest announcement meanwhile comes just days after Britain's Observer weekly newspaper that EMI's board was seriously considering either selling or demerging its recorded music division in a bid to reverse falling profits.
