EMI stox socked as exex downplay talks
Any merger would be weeks away, sez Berry
During EMI's earnings report for the six months ended Sept. 30, chair Eric Nicoli and chief exec Ken Berry told investors that any deal with Bertelsmann, while still a possibility, was likely some weeks away.
Earlier this month, EMI publicly announced that it had been approached by Bertelsmann to discuss a combination. And last week, as reports circulated in the music industry that the two companies could announce a final deal as soon as last Wednesday, EMI's shares shot up more than 15%.
But Nicoli and Berry painted a much more conservative picture Tuesday, and the resulting investor disillusionment caused the stock to retreat by 45¢ to $8.05 in London trading Wednesday.
This isn't the first time EMI's stock has taken a roller-coaster ride courtesy of merger discussions.
In January, the company agreed to merge with Time Warner's music arm, Warner Music, in a $20 billion deal that would have created the largest recorded-music company in the world. Shortly after the news broke, EMI shares went from $7.84 to a year high of $11.20.
But as the year dragged on and uncertainty mounted about whether the deal would actually go though, the stock began to fall back to Earth.
And when the concerns of European regulators about market dominance finally caused EMI and Warner to pull the deal in October, EMI shares tumbled to a new low of just under $7. Contributing to investors' malaise was EMI's admission Tuesday that the Warner talks cost the company nearly $60.2 million in legal fees and other costs.
