Radiohead's label EMI moves on Warner Music

AOL Time Warner is to negotiate with EMI, the company behind Radiohead's records, this week over a merger of their music businesses, people familiar with the situation told Reuters on 22 September. AOL Time Warner has struggled to close a deal for Warner Music with Bertelsmann's BMG, though those talks go on. EMI's head of recorded music, Alain Levy, met AOL Time Warner executives last week to propose reopening talks once Bertelsmann's period of exclusive negotiation had run out.

Talk of an EMI bid grew on 12 September, when The Guardian's Annie Lawson reported that EMI had launched a seven-year $243m (£152m) convertible bond. EMI called the bond simply prudent debt management. The money refinances existing debt, said its finance director Roger Faxon, part of which will be used to fund certain acquisitions.¹ Kingsley Wilson of Investec Securities thought some of it could go towards Warner, though it would cover only a fraction of a business worth more than £600m.

EMI, the world's third-largest music company, faces rising costs, falling sales and debts of £860m. It tried to merge with Warner three years ago, and has now renewed an offer first made earlier in the year and valued at more than $1.5 billion: $1 billion in cash and a 25 per cent stake in a combined Warner and EMI.