MUSIC group EMI has pulled out of the race for Time Warner's recorded music division.
London-based EMI said it had been unable to agree a deal with the US company that would be acceptable to both parties and in the interests of EMI's shareholders.
EMI is believed to have offered up to £1bn for the recorded music business of Warner Music Group.
But it is understood to have been trumped by a rival £1.6bn bid from an investment consortium led by entertainment entrepreneur and former Seagram chief executive Edgar Bronfman Junior.
EMI chairman Eric Nicoli said: "It is no longer possible to reach an agreement on terms which would be acceptable to both parties."
A newspaper report over the weekend said EMI could face a £1.5bn takeover move from US private equity group Blackstone if it failed in its bid.
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