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Terra Firma gains 26 percent stake in EMI, extends deadline on takeover bid
(Associated Press WorldStream Via Thomson Dialog NewsEdge) LONDON_Private equity firm Terra Firma Capital Partners said Friday it now owns more than a quarter of EMI Group PLC after Warner Music Group Corp. ruled itself out of the bidding for the British music company.
Terra Firma had been making little headway in its attempt to woo EMI shareholders for its 2.4 billion pound (3.57 billion; US$4.9 billion) takeover offer, extending the deadline several times after winning just a small percentage of the shares.
In its last report a week ago, Terra Firma said it had received acceptances from holders of less than 4 percent of EMI shares.
However, that support surged after Warner, an on-again, off-again suitor, declared earlier this week it would not make an offer, and Terra Firma said Friday it now has 26.2 percent of the shares. The firm, which is led by financier Guy Hands, extended the deadline again _ until July 29 _ but said this extension would be the final one.
The board of EMI, which has an artist roster including Coldplay, the Rolling Stones, Kylie Minogue and Joss Stone, recommended in May that its shareholders accept the Terra Firma offer, which values the business at 265 pence (3.94; US$5.44) per share.
The stock closed just below that level on Friday at 262.25 pence (US$5.39; 3.90), unchanged from the previous close.
Music companies have been looking to consolidate as the market for CDs declines rapidly. The International Federation of the Phonographic Industry estimates that overall music sales fell around 3 percent in 2006 as a doubling in digital sales failed to compensate for drops in physical CD sales and digital piracy.
EMI is struggling more than most and has cited disappointing North American CD sales for profit warnings. But analysts say that the overall industry's woes do not entirely explain EMI's poor performance, pointing out that Warner and Universal have weathered the storm better.
They instead highlight EMI's persistent weakness in the United States, lack of promising new tunes and internal control problems.
Warner, home to recording artists including Madonna and Red Hot Chili Peppers, has had on-and-off merger discussions with EMI over the past seven years. But the talks have been stymied on several occasions by regulatory uncertainty and the inability to agree on a price and its last US$4.2 billion approach was rejected in March.
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On the Net:
http://www.emigroup.com/Financial/Proposed+acquisition
Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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