U.K. entertainment retailer HMV is on course to purchase its live music joint venture partner Mama Group, after rival bidder SMS Finance confirmed its offer had lapsed without managing to secure the necessary shareholder support.

Last month Luxembourg-based SMS Finance, the investment vehicle of Italian entrepreneur Silvio Scaglia, made an offer of 3.7 pence (6 cents) per share which it later increased to 4.75 pence (7.7 cents). Mama rejected both as too low; SMS Finance has a 29.8% stake in Mama.

Following the Dec. 31 deadline for SMS Finance's offer, a statement from SMS today (Jan. 4) confirmed that its offer had "lapsed with immediate effect and is no longer capable of acceptance." Shareholders who had accepted the offer owned just 0.01% of the Mama Group equity. SMS has not increased its offer for Mama.

HMV has the backing of the Mama company directors for its Dec. 23 offer of 5.4 pence (8.7 cents) per share, which values the company at £46 million ($74 million).

HMV already owns 9.9% of Mama and the retailer said Mama's directors - whose own equity holdings total 8.9% - have recommended that shareholders accept the offer.

In January 2009, HMV and Mama Group partnered on a joint venture, named the Mean Fiddler Group, covering 11 U.K. venues including the renamed HMV Apollo and HMV Forum venues in London. HMV invested £18.25 million ($26.6 million at Jan. 14 2009 exchange rate) in the JV.

Mama also has an artist services arm, which manages acts including Kaiser Chiefs and Franz Ferdinand.