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Sanctuary goes urban with £6.6m buy of Beyoncé label

Sanctuary Group has agreed to buy the management company Music World Entertainment for £6.6m in a deal that will create an urban and gospel division headed by Matthew Knowles, Beyoncé's father and manager, who founded and owned MWE.

The publicly quoted music group Sanctuary is famous for managing Iron Maiden and Guns N' Roses.

Andy Taylor, Sanctuary's executive chairman, said: "This is a ground breaking deal for Sanctuary, putting us directly into the management of acts involved in urban music, which is one of the most popular genres in the world".

The deal will be funded by a combination of £4.25m of cash and stocks and will also involve the setting up of a joint venture record label through Sanctuary and BMG Distribution to develop urban and gospel acts and a creation of an urban tour agency in the US.

A media analyst at Investec Securities said that the acquisition was an interesting step as urban music has yet to prove its longevity like genres such as heavy metal and country and western.

Mr Knowles said that the goal was "to establish the Sanctuary/MWE brand as the market leader in taking urban artists to new heights of success and earning power".

Mr Knowles, a former sales and marketing representative for Xerox and co-owner of a Houston hair salon, began managing when he discovered that his own daughter Beyoncé wanted to sing.

He also manages Beyoncé's sister Solange and the Grammy award winners Destiny's Child.

He will continue to manage his roster of artists under an initial five-year contract with Sanctuary.