Chrysalis shares rise on offer talks
EmptyLONDON -- Shares in Chrysalis Group rose 8% on Wednesday after the company said it was in preliminary discussions with select parties that could lead to an offer being made for the British music company.
Chrysalis, which has been the subject of bid speculation since it sold its radio assets this year, said the board is assessing its options. These included remaining as an independent company, potential acquisitions or a sale.
"As part of this process, the Board is in discussions with a number of parties regarding potential acquisitions," it said.
"The board can also confirm that it is in preliminary discussions with select parties which may or may not lead to an offer being made for the entire issued share capital."
Shares in the group were up 8%, or 8.5 pence, at 115 pence.
After selling its radio assets, Chrysalis has a music division that comprises music publishing and recording companies and a struggling retail unit Lasgo.
Chrysalis sold its radio business to Global Radio for 170 million pounds ($350.6 million) in July and the group has said it expects to return 96.5 million pounds, or 57.5 pence per share, to shareholders.
It plans to pay 287.5 pence cash for every five shares held in Chrysalis Group and issue two new shares in a new group holding company, Chrysalis Plc., in a scheme that is expected to become effective Monday.
Analysts at Numis said they valued the music business at 155 million pounds on a trading basis, but believe a competitive auction could see a valuation of 180 million pounds, generating a target price of 145 pence old form shares or 215 pence new form.
Market speculation has linked Chrysalis with music giants Universal and Warner Music Group, which could also be interested in its artist management business which has become more attractive in recent years as CD sales fall.
Chrysalis said in November that its music division had shown strong growth in the year ending August, increasing earnings before interest, tax and amortization by 28.2% to 3.1 million pounds.
But Lasgo's earnings fell 45.1% to 1.7 million pounds due to ongoing challenges in the retail entertainment market.