Is Someone Stalking EMI Again?

Rumors abound that Warner Music, with the dogged perseverance of an amorous lover, may approach rival music company EMI with yet another buyout offer.

The speculation arose as EMI's shares climbed more than 12 percent since Wednesday morning. Part of the bump may be attributable to EMI's raised its earnings target and said its restructuring plan was progressing ahead of schedule. But earnings could hardly get worse, so the merger rumor mill cranked back up.

EMI has been plagued by heavy debt -- about $1.8 billion -- and precipitously declining revenue. Never a good combination.

How bad off is EMI? In addition to its restructuring plan, the company has also suspended dividend payments and is contemplating a securitization of its music publishing catalog. Among the performers in its stable are the pop singer Kelly Clarkson, metal band Slipknot and rapper Kanye West.

What does Warner say of the new rumor? No comment.

EMI rebuffed a bid in December, reportedly from European-based private equity firm Permira, and another in March from Warner, which put in an offer for 260 pence per share. There have also been whisperings of U.S. firm Fortress' interest in EMI.

Of the last Warner bid, EMI said, "The board...regards a price of 260 pence per share as inadequate...."

Will someone be able to name the right price?

by Callen Bair