HMV float price is below expectations

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The Independent Online

HMV Group, the music retailer which also owns the Waterstone's book chain, issued the price range for its stock market flotation yesterday, valuing the company at a lower-than-expected £834m. The group had been expected to be valued at about £1bn.

The indicative price range of the shares is 190p to 220p. Analysts said this put the shares on a forward multiple of about 13, a slight premium to WH Smith. Cantor Fitzgerald is quoting a grey market price of 230p to 240p.

"The valuation is lower than expected but recent retail floats, such as Carphone Warehouse, have not been a success," said Nick Bubb, a retail analyst at SG Securities.

The float will raise £351m for HMV with the money being used to cut debt and fund an expansion programme. The company has debts of £275m.

There is an intermediary offer for retail investors via Hargreaves Lansdown and TD Waterhouse. Private investors must register by 8 May. The shares will start unconditional dealings on 15 May.

According to the prospectus, Alan Giles, HMV's chief executive, will sell shares worth £710,000 in the float, leaving him with 1.9 million shares, worth £3.9m. He received £420,000 last year in pay and options. Mr Giles also denied suggestions that the float's timing had been determined by its 42 per cent shareholder EMI, which is keen to raise funds.

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