Warner renews its interest in bid for EMI recorded music division

EMI'S recorded music division appeared to be back in the sights of Warner Music yesterday amid talk that the rival US firm had joined forces with KKR, the private equity group, to consider plans for a bid.

The two parties are said to have met in recent weeks to discuss how they would structure a deal for EMI, which is expected to be put up for sale this summer.

Warner has long coveted the UK firm's recorded music division, while KKR is thought to be keen to acquire EMI's music publishing arm, which owns the rights to songs such as Over the Rainbow.

The reported interest comes as EMI prepares a rescue plan that it hopes will convince investors to stump up another 120 million and prevent it being taken over by its lender, Citigroup.

Bankers are thought to have valued the music publishing division at 1.2 billion, but the uncertainty makes it harder to place a price on the recorded music business, which generated 55 per cent of EMI's 293m earnings last year.

Any approach for EMI is unlikely until the company has resolved its stand-off with Citi, under which it has to find 120m to deal with a covenant breach on its 3.2bn of loans by mid-June.

To gain 12 months of breathing space, EMI's owner, Terra Firma, needs to win the backing of 150 of its 200 investors.

Yesterday's speculation came just days after EMI Music announced the departure of chief executive Elio Leoni-Sceti.