Warner Music is struggling to justify a higher bid approach for its rival EMI, because it does not believe it can risk an improved offer without having access to its British rival’s books.

The American music major behind Madonna and the Red Hot Chili Peppers is considering whether to improve its mooted 260p a share offer to around 280p, but is not confident that more cash would break the impasse.

Warner Music had hinted in a letter sent to EMI’s chairman, John Gildersleeve, two weeks ago that it could be willing to offer more than 260p, depending on limited due diligence, but that was not enough to impress.

EMI told the market only that Warner Music’s offer was “260p per share in cash, subject to numerous assumptions and conditions,” which the British group did not spell out. That frustrated Warner Music, although it was also possible that the American company would not offer as much as the initially proposed 260p a share.

The British music major — home to Norah Jones and Joss Stone — believes that it should not hand over what it believes is highly sensitive information to its pursuer without a commitment to a higher price, or a willingness to take on greater regulatory risk.

Formally, Edgar Bronfman, Warner’s chairman and chief executive, has yet to decide what to do, but the American company recognises that its current options are limited.

The option being canvassed as the most plausible in the Warner camp is to hang back and see how EMI performs over the coming months.

A bid at 280p — seen as the upper limit of Warner Music’s current ambitions — would cost the American concern an extra £160 million at £2.24 billion. EMI shares were trading at 244½p yesterday, up 1½p, while Warner Music was 27 cents lower in lunchtime trading in New York at $18.03.

Underlining the growing caution, Warner Music is yet to release a statement of its own after the approach to Mr Gildersleeve. The US company does not want to declare the 260p price in its own words, in the belief that the Takeover Panel will hold it to that level, and prevent a bid at a lower figure for six months.

Warner Music’s camp argues that EMI’s financial position is unstable after two profit warnings this year, and that it would be highly risky to run the gauntlet of the European Commission, which would ultimately have to approve the combination.

The Commission is currently conducting an examination of the separate Sony-BMG recorded music joint venture, a business similar in size in recorded music to a combined Warner-EMI.

Warner Music is keen for the regulators to examine both in the round, but Commission officials will not consider Warner-EMI in the context of the Sony-BMG inquiry unless there is an Anglo-American deal on the table.

Those who have been to see the Commission say that the regulator is focusing on the consumer price for music and whether a tie-up means that less music is reaching the public.

Warner Music and EMI declined to comment.

A compact history

— January 12 EMI announces a profit warning after poor preChristmas sales

— Janury 26 EMI announces plans to merge its US labels, Capitol and Virgin

— February 14 EMI issues a second profits warning. The shares fall by 12 per cent to 210p

— February 20 Impala, the independent record association, says that it would approve an EMI-Warner tie-up

— March 1 EMI rejects a 260p a share approach from Warner Music

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