WARNER MUSIC will offer EMI a sweetener of up to £100m if its latest bid for the troubled British music group is blocked by regulators.

The size of the payment reflects the confidence of Edgar Bronfman, Warner’s chairman, that a £4.6 billion merger with EMI will now be approved by competition regulators. He is prepared to offer investors a financial inducement to weaken EMI’s argument that they should accept a lower offer from private equity.

EMI, home to Joss Stone and Cold-play, has been in on-off takeover talks with Warner for more than six years. This month EMI announced it had received a number of approaches from potential buyers. The private-equity groups interested in EMI are believed to include One Equity Partners, Cerberus Capital and Fortress. Analysts expect Warner to be able to outbid these because it could reap big cost savings. It last made an offer for EMI at 260p a share.

Previous bids have foundered over regulatory concerns and management issues. One EMI shareholder said: “The Warner and EMI tie-up is the deal we have been waiting for. We turned down the private-equity approach last year because we know this is where the value is, so it’s worth the competition risk.”

Sources at the European Commission believe a Warner / EMI deal has a good chance of going through. They expect the commission to approve Universal’s acquisition of BMG Music Publishing as well as Sony and BMG’s merger.

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