Buoyant EMI makes strong case for new Warner bid.(News)

EMI and Eric Nicoli delivered the best ad for an acquisition of Warner Music last week, with a financial performance which saw both recorded music and publishing operations outstrip the global market in the past 12 months.

With pre-tax profits increasing 12.9% on revenues up a healthy 3.9% for the year to the end of March 2006, the chairman firmly threw the ball back into Warner's court. Warner's share price promptly fell to $27--the lowest level since EMI's initial May 1 approach--with EMI's own shares lifting 3.5p to close at 263p.

Nicoli dropped his biggest hint yet that the approach was only round one of the merger dance, indicating that the results are a "strong platform" for a possible acquisition.

While stressing that a deal is not essential, he says he would only pursue a transaction if it delivers meaningful earnings accretion and value enhancement for EMI's shareholders. "We are interested," he says. "We believe that an acquisition of Warner would be attractive to shareholders of both companies."

Again, Nicoli will not be drawn on the factors that could determine the timing of another approach, but agrees next year's release schedule is strong--with albums by acts including Robbie Williams, Janet Jackson, Norah Jones and The Beatles due in the forthcoming financial year. ...