Capital Radio sell-off

Capital Radio's biggest shareholder is bailing out, selling a 19 per cent stake in the fast-growing media company to institutitional investors. At last night's prices, the shares would fetch nearly pounds 100m.

The disposal, being arranged by Goldman Sachs and Cazenove, could revive speculation that the radio group is ripe for takeover, analysts said last night. The sale ends a five-year relationship between Capital and Havas, the French media giant, which intends to concentrate on investment opportunities on the Continent, particularly in pay-TV.

It bought the shares for 180p each in 1991, as a "strategic" holding in UK radio, and will make close to 3.5 times its money, subject to deal costs.

Capital Radio has long been a target of takeover speculation, due to changes in the Government's attitude toward cross-media ownership and the rapid growth of commercial radio in the past three years.

The company runs two popular London radio stations - Capital AM and FM - and plans to expand further in the UK and overseas. Commercial radio is the fatest-growing medium in the UK, and accounts for about 4 per cent of total advertising spend.

Goldman Sachs and Cazenove plan to begin the bookbuilding exercise this week, closing 13 June. It is expected that the shares will receive wide distribution.

However, depending on the price fetched for the stake, analysts expected Capital to attract renewed interest in the camps of predators. Leading the list of potential buyers is Associated Newspapers.

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