Avanti to demerge satellite business from media unit

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Avanti Screenmedia has announced plans to separate its satellite operation from its core digital advertising screen business by creating two separate AIM-listed companies.

Avanti's screens are predominantly used for promotions at tills in supermarkets, retailers and city bars. The company is also launching a satellite in 2008 that will provide European broadcasters and internet providers with a new digital platform.

Avanti expects the demerger to be complete in the first quarter of 2007. It also announced plans to raise about £5m in working capital, mostly for the media business. David Williams, the chief executive of Avanti, said that if the media unit signs more business in the retail sector, those funds could be freed up to make acquisitions.

Mr Williams, who founded the company, will take over the satellite business that will be listed as Avanti Communications Group. Mick Desmond, formerly head of ITV's broadcasting business, will become chairman of the media company.

Mr Williams said: "The screen-media business needs a big media beast with genuine media industry clout to roam the media jungle."

Mr Desmond said his first priority is to raise the profile of its screens business within the media sector with advertisers still coming to grips with the potential of the digital screens. He said the screens could be used to send relevant promotional messages directly to a user's mobile phone via bluetooth technology.

Mr Williams expects the demerger to create more value than the £73m market capitalisation that the combined company commands. He said that he expects the satellite business to attract a valuation at around that level whilst the media division should garner a market capitalisation of up to £20m.