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AOL's talks with EMI and Blackstone are taking place as the New York media giant explores a possible plan to sell its music operations in pieces rather than as a whole.
EMI GETS BLACKSTONE BACKING
Report: Investment Banker Puts Money Behind EMI in Move to Purchase WMG

Blackstone Group is teaming up with EMI to make a run at Warner Music Group operations, the New York Post reports.

The New York-based investment banking firm has an exclusive agreement to provide financial backing to cash-strapped EMI on any potential merger deal with another music company, sources familiar with the situation told the paper.

According to the report, in the last few weeks, the Blackstone-EMI consortium has held informal talks with AOL about buying the company's recorded-music division. AOL is said to value the music unit at about $1 billion.

The preliminary discussions—which cover a range of possible scenarios—are very fluid and may not ultimately result in a deal for Warner Music, the Post said. AOL has yet to decide whether it wants to sell the recorded-music business.

Meanwhile, Blackstone and EMI are keeping their options open: The group is also approaching Germany's Bertelsmann Music Group about some form of link-up, the Post said.

An EMI spokeswoman said the company would not comment on "rumors," and spokesmen for AOL, Blackstone and BMG also declined comment.

The report says AOL's talks with EMI and Blackstone are taking place as the New York media giant explores a possible plan to sell its music operations in pieces rather than as a whole. AOL is entertaining informal offers for the music division's three main businesses—the recorded-music operations, the music-publishing arm and the DVD and CD manufacturing unit—to various strategic and financial buyers in a move that could help raise $3-4 billion.

AOL had held preliminary talks to sell its entire music business to EMI, but the company now believes it may get a higher price and have an easier time with regulators by selling the units piecemeal.

Blackstone and EMI are not the only suitors circling WMG. Music companies Sony Music and BMG are said to be eyeing certain parts of the Warner music operation, as are leveraged buyout firms Thomas H. Lee Co., Texas Pacific Group and Kohlberg Kravis Roberts & Co., as well as talent management powerhouse The Firm, among others.

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