Freshfields launches Pac-Man defence for EMI

Freshfields Bruckhaus Deringer has scooped an instruction to advise EMI as its larger rival Warner Music launches a counter-bid for the UK music company.

Known as the Pac-Man defence, Warner Music, which received a bid approach from EMI on 3 May, launched a bid for its smaller rival on 14 June.

Warner Music’s initial alternative proposal to buy EMI for 315p a share was unanimously rejected by EMI’s board as “wholly unacceptable.”

EMI then hit back and on 23 June made second takeover approach for Warner Music at $31 per share in cash. Subsequently, on the evening of 27 June, Warner Music submitted to EMI a revised pre-conditional offer to take over the UK company at 320p per share. The revised offer was immediately rejected by the EMI board.

The Pac-Man defence, which shares the same name as the popular 1980s computer game, is a very risky takeover tactic. The strategy failed the last time it was used in the UK when regional brewer Martson Thompson & Evershed used it against rival Wolverhampton & Dudley Breweries.

It is understood that Warner Music is being advised by Herbert Smith. Herbert Smith was unavailable for comment.