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HMV to bid for MAMA Group?

By | Published on Friday 11 December 2009

OK, so this is interesting. Perhaps it’ll soon be His Mama’s Voice. Following the news earlier this week that the management at London-based music firm the MAMA Group had turned down a takeover offer from their largest current shareholder, there has been speculation that entertainment retailer HMV might make a bid for the company.

As previously reported, bosses at MAMA this week said that Luxembourg-based investment firm SMS Finance were being “highly opportunistic” when they proposed buying the music firm at quite a bit less than most reckon the company is worth. It remains to be seen if SMS will come back with a more generous offer, or if they would consider going behind the backs of the MAMA board to try and engineer a hostile takeover.

It’s if either of those things happen that some reckon HMV might take an interest in MAMA. The two companies are already business partners, of course, HMV having bought 50% of the music firm’s Mean Fiddler venue network at the start of the year. Retail Week cite sources as saying that HMV buying MAMA outright was actually considered before the Mean Fiddler deal was done. Although both sides decided against such a move back then, if the MAMA board was faced with a hostile takeover from one or another investment house, HMV might step in and try to outbid them.

Whether HMV would have the funds to make such a bold bid isn’t clear, and whether MAMA’s existing shareholders would accept shares in the expanded HMV instead or alongside cash is debatable. But HMV has had a good year, even though the performance of their still struggling Waterstones chain means that sales across the group are down (according to half year figures released today), even though their main HMV stores saw sales rise, buoyed of course by the demise of two of its major high street rivals. Still, Christmas is a coming, which could provide a sales boost, and Waterstones could itself be buoyed in the New Year by the collapse of its key rival Borders.

But either way, whatever the figures say, the HMV board has recently won the respect of some City types for the rapid employment of a diversification strategy, moving the firm beyond just high street entertainment retail into live music (through the MAMA deal), digital (by buying half of 7Digital) and even high street cinema (through a partnership with the Curzon group).

With MAMA another success story in the music world – with its prolific live music and artist management divisions as well as interests in music media, youth marketing, music brand partnerships, music publishing and even recordings – a combined HMV/MAMA would be quite a force in the UK music industry, and perhaps the first truly 360 degree music company (assuming you ignore the Sanctuary experiment, which it’s probably best to).