Music Zone poised for MVC

Music Zone has emerged as a frontrunner to buy the MVC music business from Woolworths in a move which would more than double the size of its store portfolio.

A deal, which would be valued at about£10 million, would make Music Zone a much stronger competitor to HMV and Virgin Megastores.

The collapse of private equity giant Apax's bid for Woolworths earlier this month pushed the MVC disposal up the retailer's agenda so that it can devote its attention to the core business.

Music Zone has aggressive expansion plans and wants to double store numbers to more than 100 within three years. The purchase of 81-shop MVC would deliver the desired scale.

A source familiar with the situation said: 'Music Zone is at the table. MVC is a massive expansion opportunity for them.'

Music Zone, which refused to comment, was the subject of a£12 million management buy-out last month led by managing director Steve Oliver and backed by Lloyds TSB Development Capital. Music Zone is generating annualised sales of£80 million.

Scottish music retailer Fopp is also understood to be interested in MVC. Like Music Zone, Fopp wants to expand throughout the UK. Former HMV managing director David Pryde is believed to have arrived at Fopp a month ago - a hiring key to the retailer's expansion plans. Pryde is understood to have acquired an equity stake in Fopp.

Pryde's arrival follows the departure of managing director Peter Ellen, operations director Paul Turnbull, personnel director Angela McCourt and sales director Stephen Carr, who had a combined 40 per cent stake in the business. Fopp was unavailable for comment.

DVD retailer Silverscreen is understood to have ruled itself out of acquiring the entire MVC estate, but has identified a handful of MVC stores that suit its needs.

A Woolworths spokeswoman said that the retailer has received varying levels of interest. It will give an update on the sale's progress at its AGM on June 7.