LONDON (Reuters) - EMI Group Plc, the world's third-largest music company, said it has dropped plans to buy smaller rival Warner Music (WMG.N) "for the time being," sending its shares down as much as 7 percent on Thursday.
The decision was expected following a European court judgment this month that annulled the 2004 approval of the merger between Sony Music and BMG, casting doubt on whether regulators would allow further consolidation in the industry.
"The board will review this position in the light of future developments," Britain's EMI said in a statement.Warner Music was not immediately available for comment.EMI, home to Coldplay and Robbie Williams, and Warner Music, the group behind Madonna, had been seeking to buy each other, with each offering about $4.6 billion.The proposals were the latest in a series of attempts over the past few years to combine the two to create a rival on a par with majors Universal Music, owned by French conglomerate Vivendi (VIV.PA), and Sony BMG, a joint venture between Japan's Sony Corp. (6758.T) and Bertelsmann.
At 0720 GMT, EMI shares were down 3.7 percent at 252 pence, the biggest fall on the UK mid-cap index (.FTMC), but off an earlier low of 244-1/4p.
EMI said in its statement that it was enjoying strong growth in digital sales and on track to deliver cost saving targets.
"EMI believes that it will, in this financial year, again deliver a strong operating performance, achieve its financial objectives and make good progress."