Universal To End Sanctuary Misery?

Two separate press announcements on the same day said Sanctuary lost another 6 million pounds in the last six months and the board are recommending the company be sold to Universal for £44.5 million.

The offer price of 20 pence cash per share is a 77.8 percent premium on the 11.25 pence per share closing price of May 17th, the last trading day prior to Sanctuary announcing it had received new interest.

The announcement came an hour before the London Stock Exchange opened June 15th, when it only took a further half-hour for Sanctuary stock to jump 12.3 percent to match the 20 pence offer price.

Four hours later, at noon, the shares had leveled 12.35 percent up at 20.25 pence.

There seems little doubt the deal will go through. The Sanctuary directors are giving their full backing to the offer and two unnamed major shareholders – who have 12.4 percent of the stock between them – have already made it clear they’re happy to accept it.

"The past few years have proved to be a very difficult time for Sanctuary and a very disappointing one for its shareholders," Sanctuary Chairman Bob Ayling said in a statement.

"Much progress has been made under the new board in the past 12 months. However, growth and profitability will continue to be hampered by the Sanctuary Group’s present capital structure and by industry factors.

"Therefore, we intend to recommend this offer from Centenary, which represents a significant premium to the level at which the shares have traded for much of 2007," Ayling said.

Universal chief exec Doug Morris described the deal as "a good strategic fit for us" and added the objective is for Universal International chairman and chief exec Lucian Grainge and his team to work with Frank Presland and the Sanctuary management team and their artists.

It’s too early to say how Sanctuary staff feels about it and the agents at Helter Skelter, who all have about a couple of years left on their contracts, are remaining tight-lipped.

Senior agents Pete Nash and Adam Saunders are in the U.S. and couldn’t be reached, while Paul Bolton, Paul Franklin and Nigel Hassler – the other three seniors – responded to Pollstar queries with a joint statement saying: "We are aware that Sanctuary is in talks with Universal but we know no more than this."

Helter Skelter, which has a roster including Amy Winehouse, Corinne Bailey Rae, Dido, Dixie Chicks, Enter Shakiri, Faithless, James Morrison, Kaiser Chiefs, Kings Of Leon, McFly and Sugarbabes, was the subject of a recent offer from Neil Warnock’s The Agency Group.

Warnock was unavailable at his London offices and not able to respond to questions about whether he’ll now be approaching Universal with a new offer for Helter Skelter.

The Agency Group chief has never made comment on his original bid, although he’s known to have a high regard for all five agents.

The Universal approach comes via Centenary Music Holdings Limited, a wholly owned subsidiary, and is part of the company’s strategy of "broadening the scope of its operations to build a diversified music entertainment company."

It gives Sanctuary an enterprise value of £104.3 million, given that the company was carrying net debts of approximately £59.8 million according to the March 31 2007 returns.