Ritz Music Group looks to buy rival
Sunday 12 October 1997
If a deal is completed, it would bring together an unlikely combination of stars.
Ritz, whose stock market value has nearly doubled to more than pounds 18m since its December debut on the unofficial Ofex market, relies for much of its earnings on Daniel O'Donnell, the easy listening singer who is the Irish Cliff Richard. The singer from Donegal has made 14 gold albums and has no trouble packing in Irish exiles at London's Albert Hall or Carnegie Hall in New York.
Grapevine, a private company owned by Paddy Prendergast and Steve Fernie, is a far cry from middle-of-the-road music and traditional Irish showbands.
It has done much to promote younger, trendier Irish talent and its artists include Christy Moore, Sharon Shannon and Sinead Lohan. Grapevine has even been able to sign up US legends like Joan Baez, who has a new album out shortly on its label, and Emmylou Harris.
"There have been talks but nothing has been agreed," said Peter Jay, a solicitor with Finers, the form that represents Ritz.
Mr Prendergast also confirmed that discussions have been held.
"There may be an announcement this week or the week after," he said. "It is almost impossible for a label like ours to expand without a partner."
Mr Prendergast dismissed suggestsions that combining the two labels would antagonise their respective artists."EMI may have Blur and Mr Blobby - so what?"
Mr Clerkin could issue high-priced Ritz shares as part or all of the purchase price. Floated at 55p last December, Ritz shares are now 90p valuing Mr Clerkin's 76 per cent holding at pounds 14m.
Ritz turned in sharply higher operating profits of pounds 645,000 in the nine months ending last December. Yet it is valued at around three times its annual turnover, a rating that leaves little to chance.
If the Grapevine deal goes ahead, Mr Jay said that Mr Clerkin, a powerfully built 57-year old, is likely to try again to list Ritz shares on AIM, the Stock Exchange's official market for smaller companies.
To do so, Mr Clerkin may have to unscramble an unusual arrangement with O'Donnell, which allows the Ritz boss to tap his top star's earnings twice.
Mr Clerkin owns one half of Brockwell, a private Irish company that owns the recording and touring rights to O'Donnell, who owns the other half.
Last year, Ritz paid Brockwell pounds 743,000 in royalties and tour-related costs. This situation is "under review" according to Mr Jay.
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