EMI. Warner and Madonna
British music giant EMI has begun a minute examination of Warner Music‘s accounts ahead of its imminent £1 billion deal to acquire the company from its parent Time Warner.
EMI will not finalise the details of the financing required for the acquisition until it completes this process, known as due diligence.
The fact that this process is now under way indicates that the deal is reaching its final stages. However, reports in New York last week that it was likely to be concluded within a few days are wide of the mark, say those familiar with the talks.
EMI, home to Robbie Williams and Kylie Minogue, has offered Time Warner £650 million in cash for Warner plus a 25% stake in the merged company which would be worth a further £420 million. The terms are understood to have been agreed by both parties.
Warner, meanwhile, is believed to be in dispute with one of its star acts, Madonna. She is considering legal action against the company over her Maverick record label, a joint venture between the performer and Warner.
Madonna is believed to want to buy Warner’s stake in Maverick before Warner is sold. She fears a new owner would not want to invest in the 11-year-old label which includes artists such as Alanis Morissette. Warner would only say: ‘We love Madonna.’
Meanwhile, Sony is talking to Bertelsmann about merging its business with BMG. Both EMI/Warner and Sony/BMG will need clearance from the competition authorities in the US and Europe before they can proceed. A Sony/BMG deal could present the regulators with more problems than EMI/Warner since the combined size of the firms is bigger.
Source: The Evening Standard