TALKS have started over a buy-out between two of the biggest names in the record industry.

EMI confirmed yesterday that it was talking to Time Warner about buying the US media company's music business.

Any deal would require shareholder and regulatory approval. But if it goes ahead, it would create the world's second largest music group, just behind Universal.

EMI confirmed it had entered non-exclusive discussions with Time Warner about a "possible transaction" regarding the Warner Music Group's recorded music division.

The group issued a statement, saying the discussions were at an early stage. It went on: "There is no assurance that they will result in an agreement acceptable to both parties."

It follows reports over the weekend that EMI had offered £913m for the Warner music business. The offer is believed to be £609m in cash and shares worth £304m, leaving Time Warner with about 25 per cent of EMI.

If it goes ahead, the deal would see EMI add artists such as Madonna and the Red Hot Chili Peppers to its roster, which already includes Robbie Williams, Norah Jones and Kylie Minogue.