Warner Music stated its board “has determined that the proposal is not in the best interests of our shareholders and has unanimously rejected it.”
Reports suggest EMI Group Chairman Eric Nicoli made the $28.50-per-share offer directly to Warner Chairman Edgar Bronfman Jr. during a conversation May 1st, Forbes said. Warner rejected it the next day.
“The board of EMI continues to believe that an acquisition of Warner Music by EMI would be very attractive to both sets of shareholders but will only pursue a transaction that delivers enhanced value and earnings accretion to EMI shareholders,” EMI Group stated.
Sources told Forbes they expect EMI to increase its bid but would not be surprised if Warner makes a counterbid for EMI.
Of the Big Four major music recording companies, Warner and EMI are significantly smaller than
As noted by Forbes, a merger between EMI and Warner would make sense for both companies, which hold solid ground in the U.K. and the U.S. respectively, but not as well in each other’s territory.
“Today’s announcement highlights the difficulties in putting together such a deal, particularly with respect to valuation and management,” Numis analyst Lorna Tilbian said.
EMI shares closed 4 percent lower on the London Stock Exchange May 3rd. Warner shares rose 71 cents to $28 in afternoon trading on the New York Stock Exchange.