EMI Group took a mauling on the stock market today as it faced another failed merger attempt after media giant Time Warner picked a rival suitor as its preferred bidder for its music unit.
Shares in EMI - home to the Rolling Stones, Radiohead and Coldplay - fell as much as 11 per cent before being partly rescued by hopes that the music company had not reached the end of the road and still had a number of options to play with.
People familiar with the situation said yesterday Time Warner's board had decided to give a consortium including former Seagram chief executive Mr Edgar Bronfman Jr. until the end of the weekend to negotiate a final deal to buy Warner Music.
If the Bronfman camp fails to seal a deal by Sunday, Time Warner could return to the negotiating table with EMI, analysts said. Even if Mr Bronfman does a deal, EMI could eventually become a target for Mr Bronfman or fire up talks with another rival.
EMI shares were trading 5.6 per cent down at 160-1/4 pence at 12.05 p.m. after falling by as much as 10.9 per cent, adding to a sharp decline yesterday on concerns over its bid. The DJ Stoxx pan-European media index was 0.7 per cent up.
Most of the big five music companies have been exploring mergers in an attempt to cut costs after three years of declines as the $32 billion music industry reels from rampant piracy and competition from rival entertainment such as video games.