EMI ON THE BLOCK?

The firms, believed to be Kohlberg Kravis Roberts and Goldman Sachs, have reportedly approached EMI after its failed merger with Warner Music Group and missed attempt to secure BMG Music Publishing in the recent auction won by UMG. KKR just last week lost out on a bid for Clear Channel’s radio holdings, teamed up with EMI for the doomed BMG Music play and unsuccessfully tried to make an offer for Vivendi.

Noting the recent movement in its share price, EMI released a statement this morning that it has "received a preliminary approach for the Company which may or may not lead to an offer being made for the Company" and that "a further announcement will be made if required."

Said Chairman Eric Nicoli in a missive to his employees: "This approach may or may not lead to an offer to acquire EMI. Due to UK regulations, I am unable to give you any further details at this time but be assured that I, and the board, fully intend to act in the best interests of the company.

"As always, the best course of action for us in such circumstances is to remain sharply focussed on delivering our business objectives. This is especially important during what is a critical time of year."

Insiders characterized the discussions as active but in their early stages, and cautioned that other parties might yet emerge or that the talks could break off altogether.

The EMI board rejected a 320p-a-share takeover offer from Warner Music last summer, when it was simultaneously trying to buy WMG. That may be the minimum price at which investors would be willing to sell, although private equity groups would find fewer synergies from a deal than Warner.

Shares in EMI closed down 6½p at 262¼p on Monday, valuing its equity at £2.1bn ($4.1bn). The shares have fallen sharply since July 13, when the EC challenged the 2004 clearance of the merger between Sony and BMG. That ruling scared away executives and investors that the any coupling of EMI and WMG would face a stiff review by Brussels, which may not issue a decision on Sony BMG until next summer.

Although Nicoli has become more receptive to a sale since the collapse of the WMG negotiations, the Financial Times insists there have been no discussions of an EMI management-led buyout, which had been previously rumored.

Analysts at Citigroup estimated last month that EMI Music Publishing could be worth £1.65bn ($3.2bn) in a break-up, compared with a possible £1.36bn ($2.7bn) valuation for EMI Music’s recorded music holdings.