EMI Says It Won't Overpay For Warner

Britain's EMI is keen to discuss valuations with bid target Warner Music Group, but will not pay as much as $5.6 billion, a source close to the company said on Friday.

The Times newspaper said earlier on Friday, in an unsourced report, that New York-based Warner Music (Charts) would consider selling itself for around $37.5 to $38.0 a share, or about $5.6 billion.

"EMI has for some time been keen to discuss valuation with Warner, but clearly believes $38 is a completely unrealistic valuation for a company that was trading at $21 in March," the source told Reuters. "On a comparable basis, $38 would value EMI at 475 pence per share."EMI and Warner Music, which are locked in a battle to take each other over, declined to comment on the Times story.

Warner shares opened barely changed at $29.20 on the New York Stock Exchange. EMI shares rose 4.2 percent at 313.75p, after touching a 4-year high of 314p in early trade.

London-based EMI, home to Coldplay and Robbie Williams, kicked off the latest move in a long-running quest to tie the two companies together in May, when it made a $4.2 billion approach to Warner Music that was immediately rejected.

Warner Music, the group behind Madonna and Red Hot Chili Peppers, countered with a $4.6 billion bid for EMI.

The British firm rejected that offer at the same time as making an improved $4.6 billion bid for Warner Music that was also turned down.

The two companies have been jostling for years to combine to create a rival on a par with majors Universal Music, owned by French conglomerate Vivendi, and Sony BMG, a joint venture between Japan's Sony (Charts) and Bertelsmann.

An attempt to merge the two in 2000 was rejected by European antitrust regulators, and EMI lost out to Warner Music's current ownership when Time Warner sold it in 2003.

The Times newspaper also said in its report that Warner Music was considering an improved 2.7-billion-pound, or 340-pence-a-share, bid for EMI.

But sources close to the matter played this down too.

The Times said EMI's board believed their company was worth closer to 400p a share.

"Talk of a 400p bid for EMI seems very unlikely given that the company was trading at 207 pence in November 2005 before speculation began," said a source close to Warner. "It's not in either side's interest to talk up bids."

Both sides are still reviewing their options and could yet raise their offers over time, the sources said.

Source: http://money.cnn.com