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EMI Gets Another Bid From PE

The EMI dance continues, with or without WMG in the mix: the world’s third-largest music company has received its second takeover approach in six months after sales of downloaded songs helped stem a decline in revenue, reports Bloomberg. Analysts expect it to be a private equity bid: Financial Times reported that Kohlberg Kravis Roberts and Goldman Sachs were in talks, and would reportedly value EMI at $4.87 billion. The talks are at an early stage and other parties may become involved, the FT said.
The overture follows EMI and Warner’s $4.6 billion offers for each other in June.
BusinessWeek: From a PE perspective, it’s tough to see the merit in a music-only company like EMI, which gets the bulk of its revenues from recorded music, a notoriously volatile arena where piracy is rife, analysts said. A buyout company also won’t be able to benefit from the cost-cutting synergies that would have been possible with a merger of EMI and Warner, said Alex Degroote, media analyst at Panmure Gordon in London…The most likely route will be to sell off the EMI Music arm, where underlying profits fell rapidly. That would enable the buyout firms to build on the strength of the more lucrative music publishing arm, currently is the industry’s largest.