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Bidders queue up in move for EMI
(Yorkshire Post Via Thomson Dialog NewsEdge) MUSIC group EMI, home to stars including Lily Allen, Norah Jones and Robbie Williams, yesterday said it had received takeover interest from a number of potential bidders.
The company has warned on profits twice this year after struggling with falling music sales and also suspended its dividend in April.
EMI, which has already rebuffed a fresh offer from rival Warner Group since its last warning in February, said there was "no certainty" that an offer would be made.
Private equity firm One Equity is among the potential bidders for the group, according to a report in the Financial Times.
EMI has a market value of GBP1.8bn but Equity One's approach values the firm at 6 billion US dollars (GBP3bn), the newspaper claimed.
EMI added that it would make further announcements "if and when required". The company has been hit by the rise of digital downloading and weak markets in the US which saw sales in the music division fall by an estimated 15 per cent in the year to the end of March.
The firm is predicting underlying earnings of GBP174m in results for the year to March 31.
EMI has tackled the crisis with a GBP110m restructuring programme, including savings from the removal of layers of management.
In its last trading update in April, the firm said it has already carried out most of these actions, with an estimated GBP70m of savings due to be achieved by the end of next March.
EMI also has a music publishing division, which until recently was the largest in the industry, and managed a catalogue of artists including Sting and James Blunt. Revenues for the last financial year are expected to be broadly flat.
Analysts at Numis said in a note to clients: "We remind investors that EMI has received several approaches from private equity before, none of which have resulted in a transaction." Last year Warner, the world's fourth-largest music company with artists such as Madonna and Red Hot Chili Peppers, offered 320p a share for EMI, but reduced that to 260p after EMI issued two profit warnings.
EMI rejected the latest offer in March, saying the price was inadequate and not in the interests of its shareholders. Private equity would be interested in the cash-rich publishing side of the business. Any potential bidders could have been influenced by EMI's comments last month that it was considering a securitisation of those assets.
EMI said the move, which would allow it to borrow against revenues from the back catalogue, could be completed by the end of this financial year.
It's predicted that any private equity bidder would be likely to consider a securitisation plan of its own.
The music industry has been damaged by internet piracy and falling CD sales, but EMI has also suffered from a lack of big hits.
Copyright 2007 Johnston Press Plc. Source: Financial Times Information Limited
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