EMI will report strong annual results this week and tell investors it is prepared to walk away from the bid for Warner if its American rival holds out for much higher than the initial offer.
The British music group, home to top acts such as Joss Stone, Coldplay and Gorillaz, will reveal that profits in the year to March rose by 12 per cent to about £158m. Revenues were up by about four per cent to £2.07bn.
EMI is also likely to report that digital revenues - music sales via the internet - have more than doubled to over £110 million. The company will also announce a further £30 million of savings.EMI made a cash-and-shares offer for Warner three weeks ago, valuing it at $28.50 (£15.16) a share, but it was rejected. However, while EMI is expected to make an improved offer, chairman Eric Nicoli is likely to indicate that he is in no hurry and is prepared to turn his back on the deal if Warner holds out for too high a price.
Any improvement in EMI's offer would involve a greater cash element, but is likely to be worth only marginally more overall. EMI insiders point to analysts who say that Warner's intrinsic worth is $21 to $22 a share, excluding a bid premium.
An industry source said: 'This opportunity will be shut down soon, within weeks not months, if common sense does not prevail. An offer of $28.50 a share is a stupendous price for Warner's investors. The share price is well under EMI's first offer price.'
Warner's artists include Madonna and James Blunt. Warner's share price closed on Friday at just above $28, valuing it at $4.2bn (£2.7bn).
Source: thisismoney.co.uk
Recommended Comments