EMI Group Plc, the world’s third largest music company, said it has dropped plans to buy smaller rival Warner Music “for the time being”, sending its shares down as much as 7%.

The decision was excepted following a European court judgement this month that annulled the 2004 approval of the merger between Sony Music and BMG, casting doubt on whether regulators would allow further consolidation in the industry. EMI, home to Coldplay and Robbie Williams, and Warner Music, the group behind Madonna, had been seeking to buy each other, with each offering about $4.6 billion. The combined company was estimated to have a quarter of the market, moving ahead of Sony BMG to rank behind Vivendi SA’s Universal Music Group.

EMI believes that it will, in this financial year, again deliver a strong operating performance, achieve its financial objectives and make good progress.