Blog Post

Warner Shareholder Says EMI’s “Disappointing Results” Would Lower Price

A major Warner Music Group shareholder made a series of negative comments about EMI Group Tuesday while at the same time continuing to talk as though the two companies might come to an agreement.The remarks by Scott Sperling, co-president of Thomas H. Lee Partners (owner of 37.2 percent of WMG), came during a session at the Reuters Hedge Funds and Private Equity Summit, and were picked up by Reuters. According to the report, Sperling said EMI’s declining profits and growth were “increasingly problematic” and suggested that WMG would need to lower its bid to match EMI’s current status. Sperling: “Clearly that’s not anywhere near what you’d want to pay today. EMI has announced a series of disappointing results and we don’t see it turning around.” But he still thinks a merger makes sense and would save both companies money while creating scale. Each company has tried to acquire the other at various times; EMI rejected a $4.1 billion offer by WMG as inadequate.
The message to EMI’s board seems clear enough: your sense of the company’s worth is inflated, needs adjusting and should lead to a merger with WMG on top. Just what every company wants to hear from a prospective suitor. For some reason this makes me think of that old net favorite: “all your base are belong to us.”
— <a href="" title="Warner, EMI Merger Could be Closer This Time; WMG Calls Talk