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Warner approaches EMI for possible merge

February 21, 2007

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Warner Music, the world’s fourth-largest music company and home to Madonna and Red Hot Chilli Peppers, said on Tuesday it had approached EMI about a possible bid and that it had the support of Impala, the trade group for independent music labels which has previously challenged consolidation in the industry.

Warner Music Group said any takeover offer for Britain’s EMI Group would probably all be in cash, briefly boosting the London-based company’s shares.

The U.S. group said its statement was to clarify that its shareholders would not be required to notify their interests in Warner Music under British takeover rules.

The approach is the latest twist in a seven-year battle in which EMI, the world’s third-biggest music group, and Warner Music have each tried to buy the other.

Both groups are struggling with a decline in physical music sales as digital downloads gain hold, and have also suffered from their artists producing fewer hits recently.

A tie-up would give both sides access to more music and the ability to cut costs. It would also help solve EMI’s historical problem of having the smallest market share of the four music majors in the United States — the world’s largest music market.

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