Sanctuary takes UMG deal
$87.7 mil offer approved by boardLONDON -- The board of directors at struggling Sanctuary Group has approved Universal Music Group's 44.5 million pounds ($87.7 million) takeover bid.
The cash offer works out at 20 pence (40 cents) per share. Sanctuary's share price had fallen as low as 11.25 pounds on May 17 but climbed significantly in recent days as the deal gathered strength and the company's announced to the London Stock Exchange that it had received approaches.
The bid, offered through Universal subsidiary Centenary Music Holdings Ltd., reflects a premium of about 59% to the average closing price of 12.56 pounds per Sanctuary share for the three months before May 17.
The agreement for the international music group encompasses recorded products, merchandising and artist services, including artist management and live agency arms.
On May 29, Billboard reported the sale of Sanctuary's share in the studio operation Air Edel for about 500,000 pounds.
"We are delighted with today's announcement as this transaction represents an important step forward for both Sanctuary and Universal," Universal chairman and CEO Doug Morris said Friday. "The Sanctuary business will be a good strategic fit for us, and our objective over the coming months is for (Universal Music Group International chairman and CEO) Lucian Grainge and his team to work with Frank Presland and the Sanctuary management team and their artists.
"We have a great opportunity to strengthen and advance Sanctuary's position as a significant player in artist management, agency and merchandising as consumers' appetite for music grows worldwide," Morris said.
Added Sanctuary chairman Robert Ayling: "The past few years have proved a very difficult time for Sanctuary and a very disappointing one for its shareholders. Much progress has been made by the new board in the past 12 months. However, growth and profitability will continue to be hampered by the Sanctuary group's present capital structure and by industry factors. Therefore we intend to recommend this offer from Centenary."
John Hayward is a correspondent for Billboard.