Ulster Television's directors yesterday moved to stave off a possible hostile bid from Scottish Media by spending more than pounds 9m buying just over 8 per cent of the company's shares.
Ulster also announced it was considering returning the majority of its pounds 12m cash pile to investors through a share buy-back. However Scottish Media retaliated by stepping up the pressure on Ulster and increasing its stake in the group to 18.2 per cent from just under 15 per cent.
Ulster held a board meeting on Wednesday, where the directors decided to bring forward the announcement of the company's interim results in the light of Scottish Media's raid on its shares last week, when it purchased of 13.1 per cent of Ulster. It is thought the directors decided to buy more shares because they feared Scottish would look to increase its stake further. John McGuckian, Ulster's chairman, was the biggest buyer, purchasing 4 million shares at a cost of more than pounds 8m.
Under Takeover Panel rules, Scottish was prevented from buying further shares for seven days after last week's dawn raid. That time limit expired yesterday, and Scottish took the chance to increase its shareholding. Scottish refused to rule out the possibility of a full bid.
One analyst said: "It's a little bit of macho posturing, but ultimately they could buy back the whole company. Scottish has certainly had a slap in the face on this one."
There was intense speculation last night about how the directors were financing the purchases. One analyst said the cash repayment arising from a share buy-back could be used to cover interest costs incurred by the directors if they had borrowed money to buy the shares.
However, Desmond Smyth, Ulster's managing director, said there was no link between the buy-back and the directors' share purchases. The directors collectively now own 10.6 per cent of the company.
Ulster announced a 22 per cent decline in pre-tax profits to pounds 3.64m for the half year to June.