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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/01/warner-bid-clears-way-for-emi-bid.jpg"><img class="alignnone size-full" title="Warner Music Group is seeking to clear a path to buy UK recording giant EMI - home of artists such as Katy Perry - reports claimed" src="http://londonglossy.com/wp-content/uploads/2011/01/min-warner-bid-clears-way-for-emi-bid.jpg" alt="Warner Music Group is seeking to clear a path to buy UK recording giant EMI - home of artists such as Katy Perry - reports claimed"/></a></p>
<p>Warner Music Group&#8217;s search for a buyer of its publishing arm Warner/Chappell is partly intended to clear a path to buy all of British recording giant EMI, a source has revealed.</p>
<p>Without the sale, combining Warner&#8217;s music publishing unit with EMI&#8217;s would have resulted in an entity so large that it would attract attention from regulators, the source added.</p>
<p>EMI&#8217;s private equity owner, Terra Firma, is nearing a default on the £3.1 billion it borrowed to buy it, and within months, lender Citigroup is expected to take over EMI, which owns master recordings of the Beatles, Katy Perry and Coldplay, among many others.</p>
<p>Warner, whose artists include Eric Clapton and Jason Mraz, is among the likely bidders when Citigroup is expected to try to sell the asset.</p>
<p>Warner is one of the few practical buyers of EMI. It is smaller than competitors Universal Music Group and Sony Music Entertainment, so purchasing fourth-ranked EMI might not trigger a long antitrust review, especially if it can divest itself of its publishing business.</p>
<p>Given the companies&#8217; overlapping functions, Warner could then save costs by merging operations, the source said. Warner&#8217;s search for buyers for the publishing business was reported earlier by the New York Times. That report set off a wave of speculation Wall Street that sent Warner Music up 1.29 dollars, or 27%, to close at 6.01 dollars yesterday. That is still down from its highest closing price in the past year of 8.01, which it reached in April.</p>
<p>Warner hired Goldman Sachs to help sell its publishing arm after it received inquiries in December from multiple bidders, said the source and another person who also requested anonymity.</p>
<p>One of the bidders was private equity firm Kohlberg Kravis &#038; Roberts, which had initially been working with Warner to buy EMI, the second person said. But, after tiring of waiting, KKR turned to Warner with a proposal to buy it.</p>
<p>In response, Warner turned to seek other bidders and a potentially higher price. Although Warner shares are publicly traded, its largest shareholders are public equity firms Thomas H Lee Partners with about 36%, Bain Capital with about 16% and Providence Equity Partners with about 8%. Warner chief executive Edgar Bronfman has about a 7% stake.</p>
<p>One reason why Warner sought bidders now is that publishing assets have been getting bid higher. KKR, which has a music publishing joint venture with German media giant Bertelsmann AG called BMG Rights Management, has been trying to grow by making acquisitions.</p>
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