Universal Music to buy Sanctuary

Morrissey's latest album was Sanctuary's first number one

Struggling UK music group Sanctuary has agreed to a £44.5m takeover by a unit of recording giant Universal Music.

The offer has been welcomed by Sanctuary, which manages the careers of Lulu and Sir Elton John, and releases music from Morrissey and Idlewild.

At the same time Sanctuary reported it had sharply reduced half-year losses after taxation from £26.7m to £6.6m.

Universal said the deal would enable it to broaden its operations to counter the decline in physical CD sales.

'Difficult time'

Universal, the world's biggest music group, said Sanctuary was a "good strategic fit" and added it would work with existing management to build the business.

As well as music management and its record company, Sanctuary is also involved in merchandising, and owns the Rough Trade and Trojan record labels.

It also handles touring for artists including Amy Winehouse and James Morrison.

Last June it rejected a takeover approach from smaller rival MAMA - which manages bands including the Kaiser Chiefs.

And in March 2006 it received a £110m rescue deal after heavy losses it put down in part to record release delays.

"The past few years have proved to be a very difficult time for Sanctuary and a very disappointing one for its shareholders," said Sanctuary chairman Robert Ayling.

"(The) acquisition... can allow the Sanctuary business to benefit from the already well-established relationships between Sanctuary and Universal and from a more supportive capital structure, which is in the future interests of artists and employees."