Warner stays in the hunt with bid to block EMI sale

Len Blavatnik, the billionaire owner of Warner Music Group, has not given up his pursuit of EMI Group's recorded music unit as its sale to Vivendi is scrutinised by regulators.

Three people with knowledge of the matter said Warner Music would seek to buy EMI's recorded-music business outright if its lobbying offensive succeeds in convincing the European Commission and the Federal Trade Commission in the US to block the £1.2 billion ($2.2 billion) deal.

Warner would also be interested in buying parts of EMI if the sale to Vivendi's Universal Music Group is approved with the requirement to sell some assets.

EMI's recorded music assets would give Blavatnik rights to songs by artists such as Coldplay, Katy Perry and the Beatles.

Warner Music has held discussions with Impala, a group that represents independent musicians and opposes the combination of Universal Music and EMI, two of the people said.

Impala won a 2006 court ruling overturning the European Union's approval of Sony and Bertelsmann's agreement to form the Sony BMG record label. Impala has said it expects an outright rejection of Universal's EMI deal.

Universal Music hasn't been given any indication that either regulatory group will reject the deal, a person close to the process said.

Vivendi spokesman Simon Gillham said Vivendi and Universal "continue to follow the regulatory course and are confident that their arguments will be heard".

Warner spokesman Will Tanous declined to comment.

Blavatnik has said that the acquisition of EMI would enable Universal Music to squash competition, but Vivendi chief executive Jean-Bernard Levy says the deal would ultimately be good for the industry and musicians.

Universal's holdings account for 27 per cent of the recorded music market, and EMI has 9.7 per cent, says Sanford C. Bernstein analyst Claudio Aspesi. Warner Music has 12 per cent.

Blavatnik might try to force as many regulatory concessions as possible, pushing Vivendi to abandon the acquisition even without a formal rejection, two people said.

The European Commission has set an initial deadline of March 23 to rule on the EMI deal.

- Bloomberg