Granada stalks Scottish with pounds 110m share buy
Wednesday 24 March 1999
The long-awaited sale, which was flagged by Mirror Group earlier this month, puts Granada ahead of its rival ITV broadcasters, Carlton and United News and Media, in the race to take control of SMG.
Granada paid 915p per share for the stake, an 8 per cent premium to SMG's closing share price on Monday. News of the sale lifted SMG shares 22p to 865.5p yesterday.
Although rules governing the amount of television advertising that can be controlled by a single broadcaster currently prevent Granada from bidding for SMG, buying the stake allows Granada to block its rivals from mounting a bid while waiting for the rules to change.
The Government is coming under increasing pressure to ease the ownership restrictions on ITV companies as Channel 3 faces competition from the exploding number of digital channels. However, the law is unlikely to be changed before the next election.
Although Granada said it had "no present intention" of bidding for SMG, it said it reserved the right to change its stance if another group built a stake of more than 15 per cent.
This means that Granada will be free to bid if one of its rivals buys the 18.6 per cent shareholding in SMG owned by Flextech, the supplier of television channels. Flextech - which is expected to report a pre-tax loss of around pounds 5m when it reports full-year results today - is thought to have been in talks with a number of potential buyers about selling the stake. CanWest, the Canadian broadcaster, is believed to be interested in taking a stake.
Analysts said the situation was similar to the takeover of Yorkshire Tyne-Tees Television in 1997, when Granada gradually built a 29.9 per cent stake in the ITV broadcaster before finally launching a full bid.
John Allwood, Mirror's chief executive, welcomed the deal. "It's great news for Mirror Group," he said. "It's clean, and it gives us the money."
Mirror has talked to a number of potential buyers about the shareholding, but settled for Granada because it was offering an immediate deal. Other options are thought to have involved buying both Mirror and Flextech's stakes as a launch-pad for a full bid for SMG.
Under the terms of the deal, if Granada sells on the stake in the next 12 months it will have to pass on any profits it makes to Mirror.
Combined with the sale of the former headquarters in Holborn for pounds 40m, which was announced last week, Mirror has reduced its debt load by pounds 150m in the space of a few days.
In a related development, the Independent Television Commission yesterday rejected a claim by British Sky Broadcasting that ITV should be forced to supply its new channel, ITV2, to the satellite broadcaster's platform. ITV2 is currently only available on ONdigital, the broadcaster jointly owned by Granada and Carlton, and cable television.
- 1 Double chins could be 'cured' without surgery or dieting using new injection
- 2 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 3 Dog thinks owner is drowning in lake, dives in and tries to pull him out
- 4 Thank heavens for Louise Mensch and her foul-mouthed tweets to world leaders
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Greece elections: Greek PM Alexis Tsipras takes aim at 'neo-liberal' Europe as country gears up for prolonged austerity battle
Auschwitz liberation 70th anniversary: Woman sent to three Nazi death camps describes surviving gas chamber
Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
Prince Philip set to be knighted by Australia: Celebrate by reading his greatest gaffes
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
iJobs Money & Business
£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...