SMG launches pounds 31m bid for VCI video publisher

SCOTTISH MEDIA GROUP, owners of Scottish Television and the Glasgow Herald, launched a takeover bid yesterday for VCI, the video publishing group.

SMG is offering 80p a share for VCI, whose video publishing rights include Thomas the Tank Engine and Manchester United. The bid values the company at pounds 31.2m.

Andrew Flanagan, SMG's chief executive, said VCI had suffered since its flotation in 1994 because it was such a seasonal business. "VCI has an excellent portfolio of rights, and as part of a larger group we will be able to absorb those fluctuations," he said.

Shares in VCI soared 29p to 78.5p yesterday. The shares, which were floated at 150p four years ago, initially performed well, peaking at 350p in 1996. However, the company was punished by a series of disappointments which pushed the shares down to below 50p earlier this year.

Shares in SMG jumped by 32p to 651p on news of the acquisition, and on the group's interim results, which showed pre-tax profits before exceptional items rising by 27 per cent to pounds 23.5m.

Mr Flanagan said that SMG would be able to use VCI to publish some of its own video titles. He added that SMG would also be able to handle the production of the videos that VCI currently makes itself.

VCI makes videos for several television personalities, including Jeremy Clarkson, the presenter of the BBC's motoring programme Top Gear, and dieting expert Rosemary Conley.

The acquisition is SMG's first attempt to move into businesses operating outside its traditional Scottish heartland. Mr Flanagan said the group, which has the financial resources to spend pounds 300m, was still looking for further purchases in England.

Meanwhile, he added that it could be "a few months" until the company found a new chairman to replace Gus Macdonald, who resigned after he was appointed a government minister earlier this year.