Rumors sent company's price up nearly 11%
A swirl of rumors followed the EMI Group Tuesday after the company acknowledged it had been approached by bidders interested in buying the company for a reported $4.8 billion.
One published report identified Kohlberg Kravis Roberts and Goldman Sachs as the suitors, but another report declared that U.K. private-equity group Permira, not KKR, is a bidder.
Either way, the rumors sent the company’s stock price up nearly 11% on the London stock exchange.
Earlier this year, potential takeover bids from — and for — the Warner Music Group also prompted investors to snap up the stock, though some sold it off when it became evident there would be no tie-up.
Before Tuesday’s spike, EMI Group’s share price sat roughly where it was early in the year, before the WMG rumors began.
Any takeover by a similar company would provoke the scrutiny of European regulators, who earlier in the year recommended that the Sony BMG merger be undone. That, insiders said, would make a sale to institutional investors more appealing to EMI Group shareholders.
In a statement Tuesday, EMI acknowledged only that “it has, this morning, received a preliminary approach for the company, which may or may not lead to an offer being made for the company.”
If a sale to a financial group did go through, it would continue a pattern for diskeries. Warner Music had itself found Wall Street ownership when Time Warner in 2005 sold it to a group of investors that included Edgar Bronfman.
While some analysts have historically been skeptical of equity groups owning media and content companies, WMG has enjoyed a turnaround at both the stock market and at the cash register.
But one crucial question for EMI Group, home to established artists such as Coldplay and newer acts like K.T. Tunstall, is whether the price would be right for EMI shareholders.
The EMI board rejected as “wholly unacceptable” an offer from WMG that, at $4.6 billion, was only slightly smaller than this week’s reported $4.8 billion bid.