The European Commission today gave private equity Terra Firma the green light to pursue its £2.4 ($4.8) billion takeover of London-based EMI Group. Only 3.56 percent of EMI’s shareholders, though, had accepted the bid by last week’s deadline, which was extended to the end of the month — it is thought they are waiting for an improved offer from Warner Music Group. While Terra Firma’s lack of other music assets made EC approval a formality, a WMG tie-up would likely require shedding some part of the merged company to satisfy regulators. EMI shareholders now know the only firm offer on the table will not face such hurdles, but there is a £24 ($48) million break clause they can use to escape the Terra offer should WMG come up with a workable proposal. (Via DJ Newswires).
Telegraph.co.uk reports Warner has drafted AGM Partners’ Alan Mnuchin to help Goldman Sachs and Lehman Brothers advise on an offer package. EMI asked WMG to come up with an offer by Saturday and gave Terra until next Thursday to do the same, the report said. A note from Pali research analyst Richard Greenfield said a takeover was risky to WMG shareholders given decline in CD sales: “There is little reason to believe that EMI will even negotiate with WMG, unless WMG offers more than 300p and EMI is unlikely to move forward with WMG without a bid of at least 315-320p. The regulatory risks remain unknown … and it is unclear whether WMG has the support of their private equity owners to actually make a bid at all.”