Warner Music Group ( WMG) and EMI dropped their takeover plans for one another, citing a recent European merger setback. The two large music conglomerates had been madly pursuing each other for ages. But now they will let things cool off in light of a recent European Court of First Instance ruling that blocked the 2004 merger of Sony BMG. London's EMI and New York's Warner have made bids for each other in recent months, but price and control issues prevented a firm deal. Warner Music Group said in a statement Thursday that it "will monitor the situation carefully, but until matters become clearer, for instance as a result of the re-review of Sony BMG by the European Commission or through an appeal to the European Court of Justice, WMG does not believe that it would be prudent to pursue a combination of WMG and EMI. Accordingly, WMG does not intend to make an offer for EMI at this time." EMI said, "When the Board of EMI put forward its proposals to acquire Warner Music it believed, and continues to believe, that there are good arguments for regulatory approval of a combination." But "EMI has decided not to pursue a combination with Warner Music for the time being. The Board will review this position in the light of future developments." Share prices of both companies have dropped precipitously since the July 13 court decision. Investors had driven prices up in anticipation of a tie-up. But Warner shares are off 18% since that time and EMI shares have lost 14%. Early Thursday, Warner dropped 80 cents to $24.41.