TO BID OR NOT TO BID

Warner Music is hesitant to up its bid for EMI without having a look at the British company’s books, The Times of London reported this morning. WMG is considering whether to increase its Feb. 28 offer of 260 pence a share to the neighborhood of 280 pence, but EMI has given no indication that the promise of more cash on the barrelhead would break the impasse.

A 280 pence bid would bring the total cash offering to £2.24 billion, or just over $4.3 billion.

WMG’s other option is to adopt a pull back once again and see how EMI does in the next few months. Last week, Coldplay’s Chris Martin revealed that the band will enter the studio to begin work on its fourth album, but it’s unlikely that the project would be complete and ready for release until late in 2007 or early 2008.

In a letter sent to EMI Chairman John Gildersleeve two weeks ago, WMG intimated that it might be willing to offer more than 260 pence if the Brits allowed limited due diligence, but that was not enough to satisfy EMI brass.

EMI is reluctant to hand over what it considers to be highly sensitive information to its pursuer unless the Bunny commits to a higher price and/or a expresses a willingness to take on greater regulatory risk. Thus far, WMG has not offered to underwrite the cost of passing through regulatory, in contrast to UMG’s commitment to Bertelsmann in its acquisition of BMG Music Publishing.

The European Commission is in the early stages of scrutinizing the Sony BMG joint venture, and WMG would love to see the regulators to look at WEMI at the same time, since the issues are similar, but the EC won’t consider the Warner-EMI combination in the context of Sony BMG unless a deal is on the table.