News Corp.’s Overtures Boost EMI Stock

EMI Group stock jumped 17% Friday after The Times reported that News Corp. was weighing a possible bid for the British music giant.

EMI--which boasts such labels as Capitol Records, Virgin Records and Priority Records--issued a statement Friday denying that any meeting or discussion had taken place with senior executives at News Corp.

The Times reported that James Murdoch, vice president of music at News Corp., had met recently with top officials at EMI. Sources at News Corp. said Friday that the 26-year-old executive had visited London during the last month but had not met with EMI officials. As reported on Thursday, News Corp. has yet to make an offer for EMI.

News Corp. sources confirmed again Friday that senior executives in News Corp. had been weighing the possibility of an EMI acquisition.

EMI American depositary shares gained $1.88 to close at $12.75 in over-the-counter trading.

The dramatic surge comes just four days before EMI is expected to announce a 20% plunge in operating profit during the period from March through September due primarily to poor financial conditions in Asia and Latin America. EMI is expected to dominate the U.S. pop chart next week with a new album from Garth Brooks.

Although the British conglomerate has been the on-and-off subject of takeover speculation for the last three years, EMI Group Chairman Sir Colin Southgate has repeatedly denied that the corporation is for sale. Southgate has acknowledged meeting with executives from Seagram, Bertelsmann, Disney and other companies over the years but has insisted that none of those meetings included discussions about a possible acquisition.

In April, however, EMI issued a statement announcing that it had been approached by a possible suitor, believed to have been Seagram.

Seagram never put in a bid on EMI, deciding instead to purchase PolyGram from Philips Electronics. Sources said that News Corp. also looked closely at PolyGram in spring but decided that it didn’t have the synergies to pay the $10.4 billion that Seagram was willing to spend.

Top officials at News Corp. began to revisit the idea of acquiring EMI last week after raising $2.8 billion by selling an 18.6% stake in its Fox Entertainment Group to public shareholders, sources said. The proceeds will be used in part to pay off News Corp. debt, which will put the company in a prime position to make a large purchase.

Bertelsmann is also eyeing EMI and might consider buying the company if the price tag drops below $5 billion, sources said.