Sanctuary receives Mama approach

Troubled music management firm Sanctuary today confirmed it had received an unsolicited takeover approach from smaller rival Mama.

Sanctuary, which has Elton John, Iron Maiden and James Blunt on its books, said it would be willing to meet the Mama board following the publication of half-year results this week.

Mama, which manages hit groups the Kaiser Chiefs and Franz Ferdinand, said it made a formal proposal to Sanctuary on July 14 with a view to making an all-share offer.

“The board of Mama believes that the possible offer is in the best interest of the Sanctuary shareholders and the Mama group shareholders,” Mama said in a statement and indicated it would proceed with a hostile offer if it could not get the support of the board.

Mama said Sanctuary had little or no presence in growing and profitable areas of the music business, such as live music, publishing and digital media.

“The proposed merged entity would have a wider presence in these growing markets,” it said.

Last month, Sanctuary, which is headed by Bob Ayling, former chief executive of British Airways, forecast full-year losses of between £17m (€25m) and £22m (€32.3m) for the year to September 30 compared with earlier City forecasts of profits in the region of £5m (€7m).

The massive cut came as Sanctuary said trading at its record label would be below previous expectations.

The profits warning was the latest in a series of setbacks to hit the beleaguered firm, which made losses of £142.6m (€209m) last year and in May sacked its chief executive Andy Taylor to replace him with Frank Presland – once a lawyer to The Beatles.

Earlier this year, it was saved from collapse by a £110m (€161.4m) rescue package to help it recover from the disastrous acquisition of Urban Records from Matthew Knowles, the father of R&B diva Beyonce.

Sanctuary has seen its share price collapse over the past year from almost £4 to around 20p.

Shares lifted 8% today – a gain of 1.5p to 20.5p – as investors cheered the prospect of an auction for the company.