Universal Music Agrees to Buy Rival Sanctuary

Universal Music Group said on Friday it had agreed to buy struggling British rival Sanctuary Group for 44.5 million pounds ($88 million), securing artists such as Morrissey.

Universal unit Centenary Music Holdings is offering 20 pence per share for Sanctuary, whose shares closed at 17.75 pence on Thursday.

Sanctuary said on Friday it believed the firm's growth and profitability will continue to be hampered by its present capital structure and industry factors.

The future of its music production division, which accounted for about a quarter of revenue, remains uncertain, mainly due to industry wide factors, it said as it posted first-half results.

The company made a smaller loss in the six months to March 31 compared to the same period a year before.

Sanctuary made a loss after taxation of 6.6 million pounds ($13 million) compared to 26.7 million ($52.60 million) a year before.

However, revenue fell to 63.7 million pounds ($125.5 million) for the period compared to 65.9 million pounds ($129.82 million) a year ago.

Net debt rose to 59.8 million pounds ($117.8 million) on Mar. 31 compared to 38.3 million pounds ($75.45 million) on a restated basis a year earlier, but was comparable with 57.1 million pounds ($112.49 million) at the end of September, 2006.

Universal Music Group, owned by French media and telecommunications giant Vivendi, is currently the world's biggest music group.