A private equity buy-out at EMI is looking increasingly likely with Guy Hands - the money man behind Terra Firma - hiking the bid to buy the music firm with a new offer of £3.7bn.

Just last week the British music group had asked its shareholders to mull over a smaller offer of £2.4bn from Terra Firma.

EMI has been keen to secure a private equity agreement for some time now and, with Terra Firma raising the stakes even higher, the music group could be close to agreeing a buy-out.

Such a private capital deal is favoured by EMI - one of the Big Four in the music biz - because it will allow the firm to avoid stringent EU regulations.

The record label part of the music group has been battling a 15 per cent drop in revenue and watched pre-tax profits tumble by more than 60 per cent in the first three months of 2007 compared to a year ago.

Terra Firma's willingness to stump up an extra £1.3bn for EMI could be seen by some as an aggressive stance to shoulder the likes of Warner and other private equity firms out of the picture.

Arch rival Warner was said to have been considering a solo offer for EMI after ditching the possibility of its own private equity bid, according to a report in Monday's Guardian, but the firm refused to comment. ®

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