Sanctuary In Buyout Talks

LONDON (Billboard) — The Sanctuary Group confirmed (June 3) that it has held discussions on a possible buyout of the firm.

"There have been preliminary talks which may or may not lead to an offer or a further business opportunity," the British independent music company said in a statement to the London stock exchange.

It adds, "During the past 12 months, and indeed on a continuing basis, it has had exploratory discussions with a number of third parties about a wide range of future potential business development and investment opportunities."

Sanctuary said further announcements would be made "as appropriate and in due course."

Mounting press speculation had prompted Sanctuary's announcement. Recent media reports have suggested the firm is talking to potential partners or investors. Companies such as Warner Music and Sony BMG, with which Sanctuary has an international licensing agreement, have been mentioned as possible suitors.

"At the end of the day, whether we're a listed company or whether we're not we're always going to be a responsible company," Merck Mercuriadis, New York-based CEO of Sanctuary Group, told earlier this year. "What we don't do is allow our artists to be affected by (financial matters). To me, we're first and foremost an artist company."

Stock in Sanctuary was trading up slightly at about 44p on Friday morning.

In a research note, investment bank Numis Securities reiterated its hold rating on the company's shares. "We are not surprised the group has attracted consolidation speculation," it says.

Sanctuary's largest shareholder is Dutch TV producer John de Mol, whose investment vehicle Talpa Capital has a 19.42% stake in the company. ING Bank and Fidelity Investment Manager each control more than 10% of the company's shareholding.

The Sanctuary Group started life in 1976 as a British management company, working with such acts as heavy metal act Iron Maiden. It has since developed a 360-degree business model with interests in artist management, recorded music, music publishing, book publishing, visual entertainment and merchandising. The publicly-listed company has a current market capitalization of around £160 million ($290 million).

Its recording arm, Sanctuary Records, is home to such artists as Morrissey, Robert Plant and Lou Reed. On the management side, Sanctuary continues to oversee the career of Iron Maiden and handle such artists as Beyoncé, the Who, Guns N' Roses, and Jane's Addiction. It recently announced a management pact with Elton John.

For the year ended Sept. 30, 2004, Sanctuary reported revenue up 45.7% from the previous year, to £220.9 million ($416 million), as pretax profits dipped slightly to £16.1 million ($30.3 million).