Few takers for EMI offer


The second acceptance deadline passed with hardly any EMI Group shareholders accepting the 4.7 billion bucks buyout offer from the Terra Firma private equity group, so it has been extended again – to July 12th. Shareholders appear to be holding out in hopes of a higher bid from Warner Music Group, which has yet to actually make a bid.

Only 3.56% of EMI shares were tendered by the July 4th deadline, hardly up from the 3.53% of shares of the record company tendered by the original June deadline (6/29/07 RBR #127). So, Terra Firma has extended its offer for a second time to July 12th, noting in its announcement that there is the possibility of a further extension.

SmartMedia observation: As the old adage goes, "A bird in the hand is worth two in the bush." In this case, the birds in the bush are former EMI CEO Jim Fifield – who lost his equity backer and doesn't appear to have found a new one, making it unlikely he will bid – and Warner Music Group – which didn't get its bid together during the formal bidding process and has not yet done so, except to say last month that it is still interested in bidding. At some point Terra Firma boss Guy Hands is going to decide that his bid isn't going to close and walk away, which would leave shareholders without the bird they now have in hand, nor either of the two in the bush. The Terra Firma bid also appears to raise no antitrust issues, while an EMI merger with Warner Music Group would face tough going, particularly with EU regulators. To switch metaphors, we have to wonder whether the reluctant EMI shareholders are overplaying the hand they have been dealt.