updated 5/3/2006 1:20:50 PM ET 2006-05-03T17:20:50

Warner Music Group Corp. has rejected a $4.2 billion cash-and-stock offer from its larger rival EMI Group PLC — the latest development in a long-running bid to unite the companies.

The music companies said Wednesday that London-based EMI approached New York-based Warner Music on Monday with a $28.50 per share offer that was rejected Tuesday.

Warner Music, which boasts artists including Madonna, James Blunt and Green Day, said its board “has determined that the proposal is not in the best interests of our shareholders and has unanimously rejected it.”

However, EMI, which has Coldplay, Kylie Minogue and Norah Jones on its books, said it continued “to believe that an acquisition of Warner Music by EMI would be very attractive to both sets of shareholders.”

EMI and Warner Music have previously held talks on a merger as a way to improve competition with Paris-based Universal Music Group and Sony BMG Music Entertainment, the joint venture of Sony Corp. and Bertelsmann AG.

Their first attempt at a merger in 2000 was vetoed by European competition authorities. The pair talked again in 2003 but Warner Music was eventually sold by its owner Time Warner to a private equity consortium led by Edgar Bronfman Jr., the former chief executive of Seagram.

A combination of EMI and Warner Music would control about 25 percent of the recorded music market, surpassing BMG in the rankings and leaving the joint entity second only to Universal, according to the International Federation of the Phonographic Industry.

EMI’s labels include Parlophone and Virgin, while Warner Music is home to Asylum, Atlantic, Reprise and Warner Bros.

Numis analyst Lorna Tilbian said that Warner’s rejection of the offer was “disappointing as we believe the logic for combining the two businesses is compelling.”

“Today’s announcement highlights the difficulties in putting together such a deal, particularly with respect to valuation and management,” she added.

Music publishers are looking for ways to counter a decline in sales of recorded music as downloading songs from the Internet becomes increasingly popular.

The IFPI reported that global music sales fell 3 percent to $33 billion last year as consumers bought fewer compact discs and illegal copying eroded revenue.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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