Willing to discuss bid from smaller rival MAMA Group.

Sanctuary Group, the U.K.-based international independent music group, confirmed today (July 24) that it is willing to discuss a potential hostile takeover bid from smaller rival MAMA Group.

MAMA’s formal all-share bid, described as “in the best interests of Sanctuary shareholders,” was originally made on July 14 and described as a solution to Sanctuary’s current financial woes.

And despite not receiving any “meaningful response” from Sanctuary’s board of directors, MAMA Group informed the media of its bid proposal whether or not the offer “is or will be recommended for acceptance.”

Sanctuary officially responded today. “The board confirms that it has received an unsolicited approach from MAMA that may or may not lead to an offer for the company,” Sanctuary declared in a statement.

“The board is continuing to evaluate the proposal and whilst this evaluation remains at a very preliminary stage, the board has already indicated a willingness, in principle, to meet with MAMA Group following the publication of Sanctuary’s interim results for the six months ended 31 March 2006 by 26 July 2006.”

Based on current share prices, industry observers estimate Sanctuary’s current market capitalization on the London Stock Exchange at £24 million ($44.3 million US).

MAMA, a media and marketing group quoted on the much smaller AIM (Alternative Investment Market) stock exchange, has a reported market capitalization of £16 million ($29.6 million US). Its Channelfly subsidiary includes a chain of U.K. rock-music venues, plus interests in music recording and publishing, and artist management.

MAMA’s planned strategy is to take over Sanctuary, dispose of its recorded- music assets, and merge its business with Sanctuary’s remaining properties to form a three-pronged enterprise: live music; artists services, management, publishing; and merchandise.

Despite being smaller, MAMA argues that Sanctuary’s recent refinancing strategies, including a £110 million ($203.5 million US) share issue, have failed to stem its losses.

Sanctuary is scheduled to report its interim results for the six months ended March 30 on Wednesday.