Warner Music says it has not ruled out making another bid for the world''s third largest music business, the UK-based EMI Group, which has agreed to be bought by private equity firm Terra Firma for $4.7 billion including debt in May this year. (See: EMI agrees $4.7 billion offer from Terra Firma)

In the past the two groups have tried to merge, but were put off by the prospects of uncertain regulatory approvals. Terra Firma''s offer, however, poses no regulatory uncertainty.

Even after EMI agreed to Terra Firma''s 265 pence offer, Warner, whose earlier offer had been rejected, said that it "continues actively to consider an offer" for EMI and would make a further announcement.

However, Warner also said that any deal between the two industry giants would require approval.

Though EMI''s board of directors has recommended the Terra Firma offer, it has yet to be approved by shareholders.

Last year EMI bid for Warner and the US company retaliated by counter bidding for its UK rival. In 2000, the two companies had first attempted to merge, but the talks fell through. The next year EMI and Bertelsmann''s BMG were in talks, which too failed to materialise.

In 2003, EMI lost out in the auction for the music arm of AOL Time Warner.

EMI, which has been struggling, has been the subject of bid speculation for the past year. It has seen its sales slide in recent months and said last month that it had made a £260 million loss in 2006 as record sales have been hit by the trend for digital downloading of music and number of high-profile album releases have had disappointing sales.

EMI announced a radical restructuring plan earlier this year, resulting in the loss of hundreds of jobs in both Europe and the US.