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 ELTON JOHN NEWS 

Sanctuary set to rebuff rival
Tuesday, July 25 2006

Embattled music group Sanctuary is expected to dismiss an all-share bid approach from smaller rival Mama out of hand.

Sanctuary, whose artists include Elton John and James Blunt, will issue the rejection to Mama in a statement to the London Stock Exchange on July 24, 2006.

The music company, chaired by former British Airways chief executive, Bob Ayling, is to tell shareholders that the board does not believe the offer is credible.

Mama, whose artists include Kaiser Chiefs and Franz Ferdinand, will at the same time release a statement confirming its approach to Sanctuary on July 14, 2006 via its broker Evolution Securities.

Mama, which is run by Adam Driscoll and former Mean Fiddler man Dean James, wants to stage a reverse take-over of Sanctuary using its own shares. If the deal were successful, Sanctuary shareholders would end up owning two-thirds of the enlarged company, with Mama's investors owning the rest.

Mama and adviser Seymour Pierce have spoken to shareholders that control 40pc of Sanctuary's equity. The majority are understood to be "furious" with Sanctuary's performance and want Mr Ayling and the rest of the board to at least speak to Mama. That is unlikely to happen on friendly terms, as it is understood the board does not consider the bid to be either credible or serious.

Mama might have to introduce a cash element to appease Sanctuary investors. A spokesman for Sanctuary declined to comment.

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