LONDON (VIP-NEWS) — UK entertainment retailer HMV has agreed a bid for its live music joint venture partner Mama Group, which values the London-based company at £46 million.
In a statement on Dec. 23. HMV said its offer of 5.4 pence per Mama share is a premium of 23% on Mama's closing share price on Dec. 4.
In total, HMV said it has already secured support for its bid from almost 34% of shareholders.
HMV owns 9.9% of Mama and the retailer said Mama's directors will recommend shareholders accept the offer. The directors have irrevocably undertaken to accept HMV's offer for their equity holdings totaling 8.9%. HMV said investors Schroder Investment Management and Herald Investment Trust, who control a further 15% of Mama's equity, will also accept HMV's offer.
Luxembourg-based SMS Finance, the investment vehicle of Italian entrepreneur Silvio Scaglia, made an offer of 3.7 pence which it later increased to 4.75 pence on Dec. 3. Mama rejected both as too low; SMS Finance has a 29.8% stake in Mama.
"I am delighted that we have agreed terms for a recommended offer," said HMV's chief executive Simon Fox in a statement. "Our joint venture has worked well since its formation and the full combination of HMV and Mama will enable us to accelerate our growth into live music."
In January 2009, HMV and Mama Group partnered on a joint venture, named the Mean Fiddler Group, covering 11 U.K. venues including the renamed HMV Apollo and HMV Forum venues in London. HMV invested £18.25 million in the JV.
Mama also has an artist services arm, which manages acts including Kaiser Chiefs and Franz Ferdinand.
Adam Driscoll and Dean James, co-chief executives of Mama, added in the statement: "Over the last four years we have developed Mama into the substantial music company which we believe it is today. In particular, Mama's activities in the live music market have demonstrated rapid growth.
"We were excited about the opportunities that were created when we entered into the joint venture with HMV in January 2009. That operation has worked extremely well and we believe there are even greater opportunities to develop and evolve the live music operations, alongside our artist services business, within the HMV group of businesses. We are delighted that HMV has recognized the financial and strategic value of the Mama Group via this offer."
For the year ended 31 July 2009, Mama reported profit before tax of £4.8 million on turnover of £38.2 million. –According to Billboard