Permira tabled the bid with Roger Parry, chairman of media group Clear Vision, who would be installed as executive chairman at HMV. However, HMV said the£762 million offer undervalues the business.
The company admitted late last month that it was being courted by a 'third party', but would not reveal the identity of its pursuer, despite widespread reports that Permira was lining up a tentative approach.
HMV said last night that it would not be holding any discussions with Permira about its bid approach and in a statement said: 'The board of HMV Group, together with its advisers, have reviewed the proposal carefully. The board has concluded that the proposal undervalues HMV Group. As such, HMV Group will not be entering into any discussions with Permira Advisers Limited with regard to the proposal.'
'We said right from the outset that we were sceptical about the chances of this approach leading to something concrete,' said Numis analyst Steve Davies. 'There are two likely scenarios from here. The first is that Permira simply walks away and that HMV goes back to being a structurally challenged business. The second is that Permira comes back with a higher offer and then goes through the lengthy process of confirming its funding and finalising its business plan. It also needs to get at least some of the existing HMV management team onside. The wording of HMV's rejection statement suggests that these things are far from guaranteed.'
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