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"EMI has effectively been up for sale since 1998 when its talks with Seagram failed and if someone was interested I would have expected them to have come forward already."
——Gareth Thomas, analyst at Commerzbank

EMI MAY BE BACK IN PLAY

Friends Warn BMG That This Could Just Be A Rebound Relationship
With its proposed merger with Warner Music Group going south, EMI was back in the takeover spotlight Monday with Bertelsmann seen as a suitor once again, but analysts were skeptical a deal was in the making.

EMI shares ended five pence higher at 525 pence—off their session highs—after an unsourced newspaper report suggested Bertelsmann wanted to combine with the British music group, Reuters reports.

"EMI and Bertelsmann aren't the most complementary with a substantial overlap in Europe that would probably require extensive disposals," said Gareth Thomas, analyst at Commerzbank. "EMI has effectively been up for sale since 1998 when its talks with Seagram failed and if someone was interested I would have expected them to have come forward already."

EMI's deal with WMG was called off last month after European regulators looked set to squash the initiative. EMI and Warner Music pledged at the time to return to the negotiating table to work on an acceptable deal to regulators.

Executives at EMI and Warner Music are now reaching the conclusion that their plans to merge will have to be abandoned, the Financial Times said.

Five weeks after claiming that a deal could still be worked out, executives on both sides of the Atlantic are of the opinion that a re-worked version of the deal, diluted to meet concerns in Brussels, is not worth pursuing.

EMI and WMG have yet to make a final decision on the fate of the proposed joint venture and could still decide to revive it. Spokespeople for EMI and WMG said that merger talks were continuing, the Times reports.

However, growing evidence that the combination will be abandoned could put EMI in play at a time when BMG is in need of additional content for its recent online moves, which include last week's controversial and surprising deal with Napster.

Many believe that the EC would never let a BMG-EMI deal fly.

For now, however, EMI is locked into an exclusive agreement with WMG, which prevents them from soliciting interest from other groups. The exclusivity agreement ends at the beginning of next year.

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