HMV to buy MAMA for $73.4 million

U.K. retailer agrees bid for Aim-listed live venues company

LONDON -- Music, books and games retailer HMV has agreed a £46 million ($73.4 million) bid for live music partner MAMA, trumping an offer from its biggest shareholder investment group SMS Finance.

HMV said its offer of 5.4 pence (8.6 cents) per MAMA share represents a premium of 23% to MAMA's closing share price on Dec. 4, the day before 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.

MAMA had rejected both of SMS Finance's bids as too low.

Shares in MAMA were unchanged at 5.5 pence, valuing the business at £44.3 million ($70.6 million). Shares in HMV were down 1.5% at 96.4 pence, valuing it at 413 million pounds.

HMV, which already owned 9.9% of MAMA, said MAMA's directors will recommend shareholders accept the offer and have irrevocably undertaken to do so in respect of their equity holdings totaling 8.9%.

It said investors Schroder Investment Management and Herald Investment Trust, who speak for a further 15% of MAMA's equity, will also back HMV's offer.

"I am delighted that we have agreed terms for a recommended offer," said HMV's chief executive Simon Fox.

"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."

SMS Finance owns a 29.8% stake in MAMA.