HMV could make a bid for its live-music partner Mama Group, which is currently the subject of a takeover bid from its largest investor.

Mama, which runs live-music venues and festivals as well as running a management agency for bands, has told shareholders to reject an unsolicited bid from SMS Finance arguing that the offer undervalues the group. 

Analysts had suggested that HMV could launch a “white knight” bid to protect its position and HMV confirmed this morning that it was considering its options.

HMV runs 11 venues with Mama including the Hammersmith Apollo in London, before investing in the joint venture the entertainment retailer is thought to have discussed the possibility of buying Mama.

Mama investors are reported to be waiting to see if a counterbid emerges and have cited HMV as the likeliest suitor.

HMV has been seeking revenue streams outside traditional entertainment retailing, which has been a shrinking market since the advent of online and downloads. As well as running live music venues HMV has also opened a cinema above its store on Wimbledon and will roll this out to other suitably sized stores if it proves successful.