EMI Abandons Its Takeover Bid for Warner Music

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

EMI Won't Pursue Its $4.6 Billion Bid For Warner Music

• Summary: EMI Group has abandoned its plans to buy Warner Music Group for up to $4.6 billion. EMI and Warner, the world's third- and fourth-largest music companies by market share, have been attempting to purchase each other since May, the latest stage of a multiyear effort to merge the two. Two weeks ago, a European Court questioned the anti-trust viability of another large music merger, between Sony Music and BMG, which joined forces in 2004 to become Sony BMG Music Entertainment. That ruling hampered the EMI-Warner merger discussions. The two companies are struggling to compete with industry leaders Vivendi Universal and Sony BMG, and could cut costs by up to $400 million if the merger were to take place.
• Comment on related stocks/ETFs: Incrementally positive for Vivendi (V) and Sony (SNE). Warner Music was sold by Time Warner (TWX) in 2004 to a group of private equity investors (led by Edgar Bronfman Jr.) who later took 23% of it public and still own the rest of the company; WMG dropped about 2.5% on the news yesterday. See the Warner Music Group's latest conference call.