SMG report cools UTV merger hope
Virgin Radio owner SMG is likely to reject a proposed merger of equals with rival talkSport firm Ulster TV, it was reported today.
The Financial Times said the £400m (€588m) merger proposed by UTV was in fact seen by SMG as an attempt to buy the company at a discount while SMG looks for a successor to chief executive Andrew Flanagan who left last month.
SMG has a higher market capitalisation than UTV so the merger would see SMG shareholders lose out.
It is thought that SMG shareholders – who include DJ Chris Evans – are instead interested in a full cash takeover bid for the company.
Media mogul Mr Evans holds nearly 10 million SMG shares, or just over 3% of the company, after he sold Virgin Radio and TV production firm Ginger Productions to SMG three years ago for £225m (€331m). His holding is worth £7.6m (€11.2m).
Any deal would also require the backing of ITV as it has a 17% stake in SMG, which also owns Grampian and Scottish TV and the Pearl & Dean advertising business.
Since SMG and UTV last week said they were in talks over a possible merger speculation has mounted that a private equity firms may be preparing a bid, although the FT today said such rumours were unfounded.
SMG shares have lifted 10% in recent days to value the company at £241.5m (€355m). UTV has a market value of £175m (€257m).
SMG’s radio and television assets are likely to represent a good fit for UTV, which bought talkSport owner The Wireless Group last year in a move that created a portfolio of 25 stations. Together, UTV and SMG would have about 5% of ITV’s audience.
On Friday, UTV said discussions with SMG were “at an early stage” and there was no certainty they would lead to a bid.
The Northern Ireland firm added that the merger “could proceed by way of a bid by either company for the other”.
