Universal Music Group, the world largest music company, is on the verge of drafting paper to take full control of ailing London-based Sanctuary Group for $205 million.
Sanctuary’s board has accepted a 20 pence-per-share offer by Universal, which valued the company at $87.6 million and including debt cost of Sanctuary’s mounts to $205 million.
In a statement Universal chairman/CEO Doug Morris said that
The Sanctuary business will be a good strategic fit for us. We have a great opportunity to strengthen and advance Sanctuary’s position as a significant player in artist management, agency and merchandising, as consumers’ appetite for music grows worldwide. The union with Universal’s global strength and leadership will further develop Sanctuary and its talent on the international music stage
Music giant universal, which has a huge presence in the recording and music publishing division, attracted by Sanctuary’s lucrative live music industry. Although Sanctuary business is running into the backward trend, but its long list of signed stars like Beyonce Knowles, Joss Stone, Iron Maiden, James Blunt, Robert Plant, Tommy Lee, Mastodon, Elton John and scheduled 200 acts spell a lucrative saga.
Sanctuary once a stock market hot selling cake, but the poor strategy puts Sanctuary on the back foot. Music Company’s mounting debt and huge pending of high-profile artists’ remuneration push music giants debt to unbearable high. Shares in Sanctuary collapsed from a high of nearly £10 in 2004 to 6p in December 2006.
In the past few years, Universal Music has experienced a steadily decline in CD sales due to the impact of online piracy and digital downloading, music majors are exploring different ways to make money from high-profile acts on their rosters, including live music and merchandising.
The transaction will have to approved by competition authorities, but industry observers do not believe there will be any objections, meaning the takeover should be completed within two months.
Image: Cdnamiru
Via: IHT
