LONDON – Record company EMI Group PLC announced Thursday it has abandoned plans to merge with Warner Music Group Corp. (WMG), following a recent antitrust ruling annulling authorization of another music industry merger.
If the deal had been completed it would have created the world's second-largest music company after Universal Music Group.
"The board of EMI has decided not to pursue a combination with Warner Music for the time being," the company said in a statement. "The board will review this position in the light of future developments."
EMI shares fell 4.1 percent to 251 pence ($4.66) on the London Stock Exchange.
London-based EMI and New York-based Warner had been locked in a series of offers and counteroffers for one another in the past two months, sparked by an initial $4.2 billion offer for Warner by EMI.
Four proposals were made over the next several weeks, all of which were rejected.
But a ruling from the European Court of First Instance two weeks ago threw doubt over whether a merger between EMI and Warner would obtain regulatory clearance. The court said evidence couldn't rule out that a 2004 merger between the music units of Sony Corp (SNE). and Bertelsmann AG violated antitrust rules.
That court cited a "manifest error of assessment" by EU antitrust authorities, who had earlier cleared the deal. EU officials at the time said Sony and BMG would have to resubmit their application for antitrust clearance.
EMI and Warner have long accepted that a combination would benefit their companies but couldn't agree on price.
A combination of EMI and Warner Music would have controlled about 25 percent of the recorded music market, leapfrogging Sony BMG in the rankings and leaving the joint entity second only to Universal, according to the International Federation of the Phonographic Industry.
EMI has such artists as Coldplay, Kylie Minogue and Norah Jones on its books. Warner boasts Sean "P. Diddy" Combs and his Bad Boy label, Madonna and Paul Simon.
EMI said it was focused on driving its recorded music and music publishing businesses forward and said it will deliver a strong operating performance this year, achieve its financial objectives and make good progress.