EU drops EMI-Time Warner Decision; Companies may resubmit alternative merger plan

It said the companies formally withdrew their request for regulatory clearance, a decision seen by some antitrust lawyers as a wise move. "This gives them the flexibility to resubmit (an altered) deal," said Kiran Desai, antitrust partner at Rowe & Maw in Brussels. "If the parties now think they've found a solution ... they could resubmit the transaction with the concessions" to offset antitrust concerns at the EU head office already built in, he added. The Commission had opposed the dlrs 20 billion EMI-Time Warner linkup for it would reduce the number of major music companies from five to four. The others are Sony Corp., Seagram Co.'s Universal Music and Bertelsmann AG's BMG. EMI and Time Warner said they would continue discussions in hope of finding a combination acceptable to regulators. "The withdrawal of our application allows additional time to reassess regulators' concerns and to pursue solutions simultaneously in Europe and the U.S.," Eric Nicoli, chairman of EMI, said in London. "We have been, and will continue to be, flexible in responding to the European Commission's concerns. However, any concessions that are ultimately made must be consistent with our shareholder value objectives." The decision to withdraw the merger plan reopened the question of consolidation in the music industry. It also removed immediate pressure on the two companies to sell off some of their prized assets. Although a revised bid seemed likely, obvious candidates are not easy to identify since the European Commission never gave a detailed outline of its objections, analysts said. "They've gone back to their corners, but they're still in the ring," said SG Securities analyst Anthony de Larrinaga. The proposed merger of EMI and Warner Music, a unit of Time Warner, was to have created a 50-50 joint venture representing 2,500 musicians _ from the Rolling Stones to Madonna. Time Warner and EMI reportedly have said they were prepared to sell assets, including EMI's Virgin Records label, to secure antitrust clearance.For EMI, the loss of the Virgin roster would be significant since the label's artists include such moneymakers as the Spice Girls, Janet Jackson and David Bowie. In Europe, Virgin accounts for half of EMI's sales.

(news.ch)