Music group EMI has announced that it shelving plans for a £1.35 billion takeover of US counterpart Warner Music Group.
The move comes after a European court judgment cast doubt on whether regulators would allow further consolidation in the music industry. "The board will review this position in the light of future developments," EMI said in a statement yesterday.
EMI and Warner Music have long been seen as a merger partners, a move which would bring together EMI's stable of artists including Coldplay and Robbie Williams with Madonna and Red Hot Chili Peppers from the Warner camp. In May, EMI approached Warner with an offer of $28.50 a share (£15.40), which was later rejected.
A month later, EMI revised its offer to $31 a share (£16.80) in cash, which was also rejected.
EMI has also rebuffed 315 pence a share and 320 pence a share counter bids from Warner Music. EMI's latest offer on June 23 of $31, valued the world's fourth-largest music company at about $4.6 billion (£2.5 billion).
Two previous attempts to join forces have also failed.
A proposed merger of the two companies was knocked back by European regulators at the start of the decade due to concerns over reduced competition in the record industry.
EMI then made a second approach in 2003, only to lose out to a $2.6 billion offer from a private equity consortium led by former Seagram chief executive Edgar Bronfman.
Warner Music returned to the stock market last year.
Panmure Gordon reiterated its 'sell' recommendation on EMI stock, saying that the pull-out had been predictable.
The broker pointed out that the European regulator retrospectively annulled the Sony BMG merger in mid July, which the broker sees as a grave obstacle to any further sector consolidation deals.