The L.A. Times said Friday that EMI was on the verge of accepting the merger offer, and the pact is expected to be announced within two weeks—possibly as early as Wednesday (11/22), according to sources.

COUNTDOWN TO
BERTELSMANN-EMI DEAL?

All They Want For Christmas Is A Merger
Talks between BMG parent Bertelsmann and EMI are moving forward and "progressing quickly." An announcement of a deal could come as early as tomorrow, say sources familiar with merger talks.

The proposed deal includes Bertelsmann merging BMG into EMI and then paying as much as $2.50 per share for a small majority interest in the company, the Los Angeles Times reported Friday (11/17). A breakdown of the proposed BMG-EMI marriage has Bertelsmann peeling off $2 billion to EMI shareholders and then folding BMG into EMI, with Bertelsmann taking a controlling interest in the British public company, HITS' crackerjack staff offers (hitsdailydouble.com, 11/15).

The L.A. Times said Friday that EMI was on the verge of accepting the merger offer, and the pact is expected to be announced within two weeks—possibly as early as tomorrow, according to sources.

Representatives for the two Euro giants have been working around the clock in New York trying to hammer out merger details.

According to London's Financial Times, Bertelsmann and EMI are ironing out the management structure of the proposed company, which would be led by joint chief executives.

The executive structure, which is expected to be discussed today (11/20) at meetings in Germany, is yet to be finalized, sources said.

The Financial Times said the two sides are discussing plans to appoint Ken Berry, the head of recorded music for EMI, and Rudi Gassner, who recently signed a five-year contract to run BMG, as co-CEOs.

If the deal flies and Bertelsmann nabs 50.1% ownership of the combined entity, the two men would ultimately report to Thomas Middelhoff, Bertelsmann's top dog. In such a scenario, EMI Chairman Eric Nicoli would take an increasingly non-executive role, sources said.

Executives meeting on Monday (11/20) are seeking to prepare a preliminary statement on the potential tie-up of the two groups for later this week.

EMI is expected to face questions from investors on the state of the negotiations when it reports its full-year financial results on Tuesday (11/21).

The company has been doing anything but sitting still in the meantime, linking with a pair of European Internet companies as it prepares to launch digital download sales on the Continent next year and pacting with Streamwaves, a Dallas-based Internet subscription music provider for streaming music on-demand.

In addition, EMI has been bolstered by the world-wide success of the Beatles' "1" album, which sold 300k its first week out in Engand and looks set for a possible #1 debut on the U.S. charts this week.

Assuming the deal does not unravel in the days ahead, Bertelsmann and EMI must still gain approval from antitrust regulators in the United States and overseas before it can be completed.

Sources said EMI would probably divest Virgin and maybe some publishing to satisfying the European Commission, which recently halted the proposed WMG-EMI merger.

Obviously, this scenario raises a slew of questions.

Did Bertelsmann head Middelhoff already do his EC homework and get some preliminary nods of approval from the Mario Monti & Co.? Was this deal part of Middelhoff's strategy when he aggressively lobbied against the WMG-EMI merger? And where does the EC's alleged fear of a five-to-four industry consolidation play in this? How will UMG react? Will it play spoiler again, and does it have even more EC juice now that it is French-owned? What about the spurned WMG? Is it still interested in an EMI play?

And, finally, who did let the dogs out?

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