Sanctuary Group, the troubled music company whose roster stretches from Dolly Parton to James Blunt, has agreed a 20p-a-share sale to Universal Music, less than 18 months after its former management raised £110m in a rescue refinancing at 50p per share.

Shares in the group closed at 20p, up 2¼p, as some traders speculated that shareholders would hold out for a higher price. Warner Music, which has also examined Sanctuary in recent months, is believed not to have ruled out a bid and was still considering its options.