Chrysalis Ends Merger Talks

Chrysalis, the music group which sold its radio interests last year, has terminated discussions about the sale of the rest of the business.

In early February, reports suggested that EMI, backed by private equity investor Terra Firma, as well as Warner and Sony were in a second round of bidding, with an offer predicted at around Gbp170m (US$340m).

Now Chrysalis has said that after detailed discussions, it has received a firm proposal at 155p a share in cash. This has been “unanimously rejected” as it “significantly undervalues” the company.

The board blamed the current market conditions for the low offer.

“The position of potential buyers and current valuation levels have been negatively impacted by global economic and credit market conditions and specific issues affecting the ability of some industry buyers to participate,” it said.

“These factors have restricted the ability of the numerous parties who expressed an initial interest in making an offer for the company, and with whom the board has engaged during the last four months, to make acceptable offers.”

The board has now “ended discussions with potential buyers.”

It will now “conduct an operational review of non-publishing businesses and assets”. This could lead to the divestment of some of these divisions. Any cash raised would be used to reduce debt.

Jefferies International and Investec advised the company.