Warner chief 'wants EMI merger'

EMI is expected to seek merger talks with the consortium that is set to snatch Warner Music away from the British group today.

Senior EMI advisers told Financial Mail that the consortium, headed by former Seagram drinks chief Edgar Bronfman, would be forced to seek a partner.

They said the consortium would find it difficult to afford the £1.6 billion it is paying for the whole of Warner Music without making savings by linking two groups.

That raises the possibility that EMI, home to artists such as Robbie Williams and Coldplay, could still team up with Warner, whose stars include Madonna and REM - albeit under Bronfman's control.

A City source close to EMI said: 'Bronfman is paying a monumental price for Warner. We think it is insupportable without the savings offered by being part of a larger group, which, of course, he will not have. They simply cannot make that much money, especially if he keeps the Warner management.'

EMI offered £590 million in cash and up to 25% in the merged company worth a further £350 million for Warner. EMI, chaired by Eric Nicoli, wanted Warner's recorded music division, but not its publishing arm. It will not raise its offer ahead of today's deadline imposed on Bronfman.

EMI's advisers believe Time Warner's board, led by chairman and chief executive Dick Parsons, gave Bronfman's bid the green light because of concerns that the competition authorities would block a deal with EMI. Previous merger attempts have fallen foul of European Union competition rules.

Parsons is believed to have received at least half-a-dozen offers for Warner Chappell, the music publishing arm that receives most of its revenue from copyright fees and back catalogue sales.

EMI shares fell sharply on Friday after Warner chose the Bronfman-led bid. They closed down 6 1/2p at 163p, valuing the company at £1.3 billion.