HMV mulls making a move on Mama Group

The music and video games retailer HMV last night bought an 8.2 per cent stake in Mama, the live music and management group which runs venues including London's Hammersmith Apollo, Jazz Café and Heaven.

The announcement increased speculation that HMV could launch a full bid for Mama, after saying earlier in the day that it was "considering its position" in relation to the company.

That statement came after Mama, which represents artists including Franz Ferdinand and Kaiser Chiefs, rejected an improved bid from Silvio Scaglia, an Italian entrepreneur, on Wednesday. Mr Scaglia, whose SMS Finance is Mama's biggest individual shareholder, with a 29.8 per cent stake, offered £38.4m for the shares he did not own after being told to increase an earlier bid. HMV refused to comment beyond yesterday's statement, but City analysts suggested there was a rationale for bidding for the rest of Mama.

"The venue business is an important area of development for HMV," said Matthew McEachran, of Singer Capital. "The group has done a lot to repair its balance sheet but it still needs to diversify away from its core business. A deal with Mama would certainly be synergenic, but there may be less incentive to do that because the joint venture offers incentives for Mama's management."

In January, HMV paid £18.25m for a 50 per cent share in the newly established Mama venture Mean Fiddler, which owns 11 venues including the Hammersmith Apollo – now renamed HMV Apollo – and the retailer profits from ticket and merchandise sales.

Mr Scaglia, a former chief executive of the Italian broadband operator Fastweb, raised SMS's offer for Mama to 4.75p per share on Wednesday, only two days after it had bid 3.7p.

Yesterday, HMV paid 5.25p each for 66.5 million shares.

SMS said its offer, which would have required a 50 per cent acceptance rate from Mama's investors, represented a "compelling opportunity for... shareholders to realise value for their shares in cash at a time of continuing economic uncertainty, market volatility and low market liquidity for Mama shares".

A takeover by SMS would also give Mama a foothold in North American and Asian markets. It is understood, however, that several Mama shareholders are keen to entice HMV into counter-bidding for the company.

By the end of this month, Mama is due to repay £2.5m in two convertible loan notes it borrowed from Pacific Capital, a subsidiary of SMS. Mama has said it will be able to find the money from its reserves.

There is unlikely to be an update as part of today's interim results statement from HMV. Analysts at UBS forecast that its pre-tax losses will be £25.5m, against £27.5m this time last year. Like many of its rvials, HMV has struggled as shoppers increasingly buy music, video games and books online. But it has benefited from the demise of high-street competitors such as Woolworths, Zavvi and, more recently, Borders.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk