Music giants in takeover tug-of-war

Music giant EMI and US rival Warner Music were locked in a takeover tug-of-war today as both companies battled to take control of each other.

EMI - home to Coldplay, Gorillaz and Robbie Williams - said today it had rejected a 320p-a-share offer from Warner which valued the company at £2.54 billion.

The Warner bid came in response to a £2.52 billion offer from London-based EMI, which the US firm rejected last night as the two companies traded blows with a series of takeover proposals.

The frenzied bidding activity sent shares in EMI 9% higher today to 309p.

A tie-up between the two music giants has long been regarded as a strong possibility as the pair have circled each other for years, with agreements almost reached in 2000, 2001 and 2003.

The combined music company would be the third largest in the world behind Universal Music and Sony, and would bring together EMI's stable of artists with the likes of Madonna from the Warner camp.

The latest takeover battle began in May when EMI launched a £2.31 billion bid for Warner, which was immediately rejected.

A month later, on June 14, Warner made an alternative bid for EMI worth £2.5 billion, but EMI said it was too low and it was unanimously rejected by the board.

On June 23 EMI went back to Warner with an improved £2.52 billion offer, which valued its shares at 31 US dollars (about £17) each.

This bid was rejected by Warner last night, and triggered the US firm's improved £2.54 billion offer for EMI.

Today, EMI said: "The board of EMI has unanimously rejected the revised alternative proposal from Warner Music at 320p a share and considers it to be wholly unacceptable.

"The board of EMI continues to believe that an acquisition of Warner by EMI at 31 US dollars a share in cash would be very attractive to both sets of shareholders."