Trans World warned in Emap takeover battle: Panel says shareholders must be consulted

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The Independent Online
THE executive of the Takeover Panel has told the board of Trans World Communications to dissociate itself from an attempt to quash a ruling by the Radio Authority on the legality of the structure behind a pounds 70m bid for the radio group from Emap, the publishing company, unless it can win the approval of shareholders.

The Guardian Media Group, which owns 20 per cent of Trans World, and the Trans World board, are seeking a judicial review of a Radio Authority ruling that Emap would not breach local radio ownership restrictions by buying Trans World. The hearing is due to take place on 27 July.

The Takeover Panel is understood to have told the Trans World board that it is bound by a general principle that bid targets should not seek to frustrate bidders by legal challenges unless they have the support of a majority of shareholders.

This is unlikely to be forthcoming: Emap, which has 30 per cent of Trans World, has already secured the support for its bid of entrepreneur Owen Oyston, who owns a further 22 per cent.

As a third-party shareholder the Guardian is unaffected by the panel's ruling, and is understood to plan to continue its action.

If successful, Emap would need to restructure, or abandon, its bid.

The basis for the Guardian's case is the fact that if the bid for Trans World succeeded, Emap would hold eight radio franchises, two more than current legislation permits.

Emap plans to move the additional licences into a company jointly owned with Schroders, its merchant bank. The Radio Authority has ruled this would not breach the ownership restrictions.

This ruling is being contested by the Guardian, which also wants to increase its stake in Trans World but is restricted by rules preventing national newspapers owning more than a 20 per cent stake in a local radio group.

The Trans World board argues that the 181p on offer from Emap is insufficient.

It is also concerned about the status of minority shareholders in the company if the court should rule that Emap's arrangements are in breach of the legislation.

As a result it decided to join the Guardian in its legal application for a judicial review of the Radio Authority's decision.

The panel's instructions to the Trans World board follow a complaint by a Trans World shareholder linked to Mr Oyston. It is open to the Trans World board to appeal the decision to the full Takeover Panel.

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