HMV rejects bid by equity firm Permira |
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Wed, 08 Feb 2006 17:10
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LONDON: Music store chain HMV Group Plc. revealed it had received a conditional 762-million-pound offer from private equity firm Permira Advisers Ltd. and that it rejected the offer as too low.
The company said in a statement its board felt the 190-pence-a-share proposal undervalues company and as such it will not be taking the offer further nor will it be discussing it with Permira.
The music and book retailer had said last week that it had received an approach and that it would disclose the details later after an initial assessment.
Meanwhile, names of two U.S. private equity firms -- Kohlberg Kravis Roberts & Co. and Blackstone Group -- are being mentioned as potential bidders for HMV.
HMV is in the midst of acquiring bookseller Ottakar's and the matter is now with the Competition Commission, which is expected to come out with provisional findings in March.
HMV shares closed at 184 pence, valuing the company at 738 million pounds.
Meanwhile, sources in the know said Permira has arranged for Roger Parry, who heads the U.K. unit of American media company Clear Channel, to take control of HMV in case it wins the bid.
A spokesperson said the equity firm has been looking at HMV’s business and it has found very serious structural difficulties. The price of 190 pence constituted a full and fair price.
HMV, whose sales and shares have lost ground in the recent past, is vulnerable to acquisitions. It is affected by competition from super markets while online music downloads have affected its CD business. Its like-for-like sales fell 2.7 per cent this Christmas compared with last and pre-tax profits in the 26 weeks to the end of October were just 200,000 pounds, down from 10.5 million during the corresponding previous year period.
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