British music retail giant HMV Group today (Jan. 30) said it had been approached regarding a takeover. In a brief statement issued this morning to the London Stock Exchange, HMV confirmed an approach
British music retail giant HMV Group today (Jan. 30) said it had been approached regarding a takeover.
In a brief statement issued this morning to the London Stock Exchange, HMV confirmed an approach had been made, although the identity of any potential buyer has not been revealed. "The board of HMV confirms that it has received a preliminary approach from a third party which may or may not lead to an offer being made for the company." HMV added that a further announcement would be made in due course.
Press reports published on the weekend speculated that private equity firm Permira was tabling a bid worth £800 million ($1.41 billion) as early as this week. Permira declines to comment on the reports. The company has offices in the United Kingdom, France, Germany, Italy, Spain Sweden, Japan and the United States.
On Friday (Jan. 27), HMV Group stock closed at £1.645 ($2.90), valuing the company at roughly £660 million ($1.17 billion). Other press reports suggest U.S. private equity firms KKR and Blackstone have seriously considered bids for the retailer.
At Oct. 29, 2005, HMV Group operated 579 store worldwide. HMV U.K. & Ireland -- the powerhouse of the group's international business -- had 218 stores, up from 193 on the same date in 2004. The group also has 109 HMV stores in Canada and 57 in the Asia Pacific region, while its U.K.-based bookseller Waterstone's has 195 outlets.
Confirmation of an approach comes on the heels of a gloomy financial trading report for the first half of its current financial year and executive reshuffling within the company's upper ranks.
Stock in HMV tumbled on Jan. 12 after the firm reported a slump in first-half operating profit on sales which fell 0.1% to £759.7 million ($1.34 billion). It simultaneously announced its chief executive Alan Giles would exit at the end of 2006. Just days after those announcements, HMV U.K. and Ireland product director Steve Gallant was replaced by operations director Simon Peck.
In morning trading Jan. 30, HMV's shareprice soared 17.35% to £1.92 ($3.41), valuing the company at £776 million ($1.376 billion). HMV's stock price opened at £1.92 when it launched an initial public offering in May 2002.