EMI has today said it has received a bid approach from rival US music publisher, Warner.
The approach is the latest development in an ongoing, seven-year battle that has seen both companies try to buy the other.
Although EMI, the world's third-biggest music group, said it had not received a firm proposal from Warner, a potential merger could provide a means for both companies to reverse declining revenues as a result of their struggle to adapt their businesses to the growing music download market.
The City has been rife with speculation that EMI would receive a fresh takeover approach after it issued two profit warnings in just five weeks. But analysts have warned of regulatory hurdles in creating the world’s largest music company must be overcome before any deal would be possible.
The companies have attempted to merge in 2000 and 2003. And last year, they were embarked on $4.6 billion (£2.4bn) talks to buy each other, until a European court annulled approval of the 2004 merger of Sony Corporation’s Sony Music and Bertelsmann's BMG in June.
The companies abandoned the deal for fear the creation of similar monopoly would not get regulatory clearance.
EMI has responded to today’s approach from Warner, saying: "If a proposal is made, it will be considered with a particular focus on conditionality, the regulatory and operational risk profile, and on valuation in relation to the company's standalone value and the value creation available from a combination.”