HMV Boosts Mama Stock

If Italian broadband entrepreneur Silvio Scaglia wants to buy Mama Group, he’ll likely have to stump up nearly 6 pence per share after British retailer HMV paid £3.5 million for an 8.2 percent stake in the company.

The Dec 14 closing price of 5.50 pence was well up on the 4.75 pence Scaglia offered Dec. 9. Mama, which owns a chain of British music venues as well as a management company, knocked back the bid, saying it undervalued the company.

Having closed at 4.38 pence Dec. 11, investors look to be betting that Mama might attract interest from other music groups. The share price rose 29.14 percent during the course of the day, reaching 5.65 pence at its peak.

HMV, which paid 5.25 pence per share Dec. 11, is said to be weighing up whether to try to buy the whole company.

In January it paid £18.25 million for a 50 percent stake in 11 Mama venues including London’s Hammersmith Apollo and Jazz Café. Since then, Scaglia has amassed a 29.8 percent stake in Mama.

HMV has just announced it made a pre-tax loss of £24.9 million in the 26 weeks to Oct. 24, but it historically makes its profit in the second half of the year.

This year it will have more of the Christmas market share, following the demise of retailers Zavvi, Woolworths and Borders UK.