Richard Branson's Virgin Group has sold-off its Virgin Megastores U.K. and Ireland chain for an undisclosed sum.

A team led by Virgin Megastores managing director Simon Douglas and finance director Steve Peckham has bought the 125-store chain, and will rebrand the U.K. business as Zavvi by November. The Irish business and the U.K. online presence will be rebranded by January 2008.

"We are an independent company, we are privately-owned, and our goals are absolutely about being successful, profitable, forward-thinking and reacting to what's happening on the High Street," Douglas, who becomes managing director of the new company, tells

"We felt that if we weren't answering to a group, this was a major opportunity. We're light on our feet and we can have a bit of an independent ethos. The time is right." Douglas declined to identify the MBO's financial backers.

Zavvi -- a play on the word "savvy" -- will become the U.K.'s largest specialist independent entertainment retailer with a workforce of 2,500 staff, Douglas boasts.

"With the likes of Fopp disappearing off the High Street, and SilverScreen not that long ago, we felt there was a real opportunity for a fresh new brand," Douglas tells

"There's obviously a market out there, because there were a lot of people out there who shopped at Fopp but don't shop at Virgin or HMV. Hopefully they'll shop at Zavvi."

The decision to drop the Virgin moniker was a condition of the deal. "We understand the challenges of not having the Virgin name above the doors. The negative is you're never going to match Virgin; It is one of the top brands in the world," Douglas admits.

"But when we thought about it, we've got 125 stores which are all pretty-well located, and a Web site. So it's not a bad start. Also, a lot of customers who are used to shopping with us, hopefully they will be inquisitive enough to cross the threshold and come and see what we're about."

Britain's Entertainment Retailers Association gave the MBO a "welcome vote of confidence," and declared the move a positive sign for the music retail market.

"The fact that the management has been able to secure funding for this deal shows the robust prospects for entertainment retail," said ERA chairman Paul Quirk in a statement.

In 2006, Virgin Megastores accounted for 11.8% of albums and 6.5% of singles expenditure in the United Kingdom, according to data published in the BPI's Statistical Handbook.

In the joint statement, Branson explained that entertainment retail played no part in Virgin Group's plans. "In the last six years," he said, "we have been withdrawing from entertainment retailing which is no longer viewed as core to the Group's future." The company's remaining entertainment retail operations will be franchised in future. Branson noted that the U.K. company had been "the last significant Virgin wholly-owned retail business in the world."

Last month, Virgin Entertainment Group North America (VEGNA) spun-off its 11-unit Virgin Megastore operation in North America, in a deal involving development and management firm New York-based Related Companies and Vornado Realty Trust.

The move is the latest stage in Branson's move away from front-line entertainment businesses. He sold off 95% of his record label V2 to Morgan Stanley in 2002. In early August 2007, Universal Music Group struck a deal to buy V2 from the investment bank.