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MAMA bidders in talks with HMV

By | Published on Friday 6 January 2012

MAMA Group

So, have you got your bid in for the MAMA Group yet? Following HMV’s confirmation last month that it was undertaking a “strategic review” of its live division that could lead to a sale, it’s thought various bidders are now in talks with the struggling entertainment retailer about acquiring MAMA.

HMV Live was created in 2010 when the retail firm took ownership of the then publicly listed MAMA Group, which owns much of the old Mean Fiddler venue network as well as a number of festivals and some artist management and music services businesses. Despite plans to integrate HMV’s content and live entertainment interests, in reality MAMA has continued to operate pretty autonomously, with the HMV brand only applied to some of its output. Which will make a sale much easier to achieve.

MAMA co-founder and CEO Dean James is known to be planning a bid to buy back the company, presumably by leading a consortium of investors, likely to include one or more private equity groups. Talking of which, both Oakley Capital and Pacific Global Management are also said to be interested, the former being the equity company that bought half of Time Out in 2010, the latter the outfit that unsuccessfully bid for MAMA before HMV’s 2010 acquisition.

As for other music industry players, AEG Live is said to be considering an offer. It’s most likely that the company will be interested primarily in the Hammersmith Apollo, arguably the jewel in the MAMA crown (and arguably the jewel in the whole HMV Group crown at the moment). Some wonder if HMV, keen to raise as much cash as possible from any MAMA sale, might not sell the Apollo off separately, making it easier for James to lead a management buy out for the rest of the company.

Assuming a sale goes through – and some reckon it could as soon as March – it will bring to an end HMV CEO Simon Fox’s grand diversification plan, a sensible if expensive strategy to assure the heritage brand’s long term future by expanding into other areas of the entertainment industry, and looking for synergies between those different strands.

While City types were always dubious about that plan, it did seem the best possible option for the retailer, whose last man standing advantage was always going to be short lived as both mainstream entertainment retail and high street retail in general continued to collapse. Since having to change course to placate the bankers who had funded the ‘diversification through acquisition’ agenda last summer, Fox seems to have now totally focused his efforts back on the main HMV shops, though few outside the CEO’s core team really believe diverting more floor space to tech products is a panacea.

On the up side, HMV still has the impassioned support of many of its suppliers, and especially the music majors, and especially Universal Music, who still place a lot of value in having their products on the high street. And a key money lender is the almost state owned Royal Bank Of Scotland, who will be subject to government pressure not to let the entire high street sector crash and burn. And the sale of MAMA is likely to fetch more than HMV paid for it in 2010 and, if sold along with its 50% stake in 7Digital, could make a sizable dent in the Group’s current debts.

Though it will mean offloading the company’s most profitable division, and resolutely ending the most interesting strategy Fox has pursued during his tenure at the company. And with the firm’s shops expected to reveal another slump in sales next week, the quick cash boost a MAMA sale will deliver isn’t going to do much to clear the gloom hanging over HMV HQ.

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