Warner Rejects EMI Acquisition Proposal
After much speculation, Warner Music Group has unilaterally rejected a buy-out bid from the EMI Group. Warner issued this brief statement:
“Warner Music Group Corp. (NYSE: WMG) recently received a preliminary non-binding proposal from EMI Group Plc. The Warner Music Group Corp. board of directors has carefully evaluated the proposal in conjunction with the company’s outside legal and financial advisors. The board has determined that the proposal is not in the best interests of our shareholders and has unanimously rejected it.”
No reason was specified by the Warner board and EMI only released this communication regarding the matter:
“Following recent press speculation, EMI Group plc (EMI) confirms that on 1 May 2006 it made an approach to Warner Music Group Corp. (Warner Music) in connection with a proposed offer by EMI to acquire all of the outstanding shares of Warner Music for $28.50 per share, in a combination of cash and EMI shares. Subsequently, on 2 May 2006, Warner Music informed EMI that it did not wish to enter into discussions regarding EMI’s proposal.
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.”
The rejection comes after knowledgeable sources hinted at a recent meeting between EMI Group chairman Eric Nicoli and Warner Music Group chief Edgar Bronfman, Jr. in New York.
The Future: This could just be the beginning of another round of negotiations.