Troubled music group Sanctuary has accepted a takeover offer from Universal Music Group.

The firm, which manages James Blunt and Sir Elton John, announced on June 15, 2007 that Centenary, a division of Universal, has offered to pay 20p a share. This values the company at £44.5m. Universal will also take on debts of £59.6m, giving Sanctuary an enterprise value of £104.3m.

The music giant had been tipped as a likely bidder, as it already counts Elton John as one of its artists.

The takeover comes after a very difficult period for the record label, which was founded by two Cambridge students over 30 years ago. It has issued a string of profits warnings in recent years, and last year admitted making "fundamental errors" in its accounts.

Chairman Robert Ayling, the former boss of British Airways who joined Sanctuary last year, said the deal offered a brighter future for the company. "'The past few years have proved to be a very difficult time for Sanctuary and a very disappointing one for its shareholders," he admitted.

Its shares, which were changing hands for £17 in May 2005, fell to a low of just 6.5p last November. They closed yesterday at 17.5p, having risen in recent weeks amid speculation that Universal or Warner would bid for the group.

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