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EMI shares climb on merger rumors
Speculation that world's third-largest music company may be gobbled up by Warner Music pushes stock up 10 percent.
Shares of music giant EMI Group Plc jumped 10 percent today amid speculation that Warner Music Group might finally consummate its long-rumored acquisition of the company.
EMI shares rose 22 pence (38 cents) to 242 pence ($4.17), giving the company a market value of about 1.9 billion pounds ($3.27 billion). Prior to today, the stock had declined 17 percent this year.
The stock was trading at a much higher volume than normal, with 44.5 million shares turning over on the day, more than four times the average daily volume of around 10 million shares.
Analysts have speculated for years that Warner Music, home to Madonna and Green Day, would merge with EMI, the world's third-largest music company and home to artists like the Rolling Stones, Coldplay, and Gorillaz.
The two companies came close to merging in November 2003, when Warner Music was owned by Time Warner Inc., but the deal never panned out. Time Warner sold Warner Music late 2003 to a group led by Edgar Bronfman, now the company's CEO. Warner Music went public earlier this year.
"There's bid speculation out there concerning a number of players,'' Lee Humphreys, head of European sales trading at ETrade in London, told Bloomberg News. "I would take it with a pinch of salt though. The stock fell sharply in October, and today's rise is probably a combination of buyers getting back in after the drop and vague speculation of a takeover.''
Shares in Warner Music remained largely unchanged today, dropping 1 cent to $17.60 in midday trading on the New York Stock Exchange.
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