HMV set to take over live music joint venture partner Mama

HMV Group is set to take over Mama Group, its joint venture partner in live music, after agreeing to a cash bid of £46 million that beats a previous offer from SMS Finance, Mama's biggest shareholder.

With the proposed move at 5.4p a share for Mama's entire share capital, HMV would expand its role in the thriving live music sector, a diversification that will see it move away from its established role as a core retailer of physical music, books and film.

Simon Fox, HMV chief executive, said he was delighted there was an agreement on the terms for a recommended offer. He added that the joint venture had worked out well since its formation and the full combination of HMV and Mama would enable acceleration of HMV's growth into live music.

HMV and Mama have been hard at work to secure the agreement before Christmas, and in a statement on Tuesday, Mama directors unanimously recommended HMV's 5.4p per share offer.

However, a sticking point could be Italian entrepreneur Silvio Scaglia, whose SMS Finance is the biggest of Mama's shareholders. He had launched a £38.4 million bid for the group earlier this month. Scaglia, a former chief executive of Italian broadband group Fastweb, holds a 29.8 per cent stake and is yet to announce his intentions concerning the HMV bid.

Two other major shareholders, Herald Investment Trust and Schroder Investment Management have already agreed to sell their combined 15 per cent stake to HMV.