UPDATE 1-EMI rejects Warner Music's $4.1 bln bid proposal

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LONDON, March 2 (Reuters) - Britain's EMI Group Plc EMI.L has rejected a 2.1-billion-pound ($4.1 billion) cash takeover proposal from Warner Music Group (WMG.N), saying on Friday it was not in the best interests of its shareholders.

"The board concluded that it is not in the best interests of EMI shareholders to entertain a pre-conditional offer which would entail prolonged regulatory uncertainty and unacceptable operational risk at a critical time for the company," EMI said in a statement.

The world's third-largest music company and home to Robbie Williams and Coldplay, EMI said it held a board meeting on Friday after receiving a non-binding proposal from Warner, which indicated it might be prepared to make a bid at 260 pence per share.

Warner, the world's fourth-largest music company and with artists including Madonna and the Red Hot Chili Peppers, approached EMI about a possible bid at the end of January despite uncertainty over whether it would win European regulatory approval.

Warner Music declined to comment.

EMI had said it would consider any bid in terms of the price offered and whether it would be approved by European regulators.

Shares in EMI, which issued its second profit warning in as many months in February, rose by as much as 8 percent after it rejected the proposal. The shares closed 4.45 percent higher at 246-1/4 pence.

(Additional reporting by Jeffrey Goldfarb)

((Reporting by Miyoung Kim, editing by Quentin Bryar; Reuters Messaging: miyoung.kim.reuters.com@reuters.net; e-mail: miyoung.kim@reuters.com; +44 20 7542 1373))

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