GWR looks to have snatched loss- making Mid Anglia Radio from under the nose of its neighbour, East Anglia Radio, adding to the pace of commercial radio consolidation.
GWR, in which Capital Radio has a near-20 per cent stake, has won the support of Mid Anglia's board for a pounds 3.5m offer in cash or shares, significantly higher than the pounds 2m East Anglia Radio was prepared to pay when talks foundered 18 months ago. A few weeks ago East Anglia wrote to Mid Anglia to suggest negotiations re-start, but no talks were held.
Nevertheless, the fate of the bid lies with Emap, the publishing group, and Anglia TV, owned by MAI. Each holds 20 per cent of both Mid Anglia and East Anglia. Emap favours consolidation in general - it was said to be behind the East Anglia approach to Mid Anglia - but is blocked from boosting its own stake beyond 20 per cent as it has local newspapers in the same region.
Emap and Anglia TV now have the choice of cash or shares - so acquiring a stake in GWR - or potentially jointly blocking the bid, which requires 75 per cent approval. So far, GWR has irrevocable acceptances from just over 50 per cent of the shareholders.
Richard Winfrey, Emap's representative on the Mid Anglia board, abstained from voting on the deal, saying he faced a conflict of interest. But Tim Schoonmaker, head of Emap's radio interests, said no decision had yet been made.
The offer is 450p in cash or 0.53257 shares in GWR for each Mid Anglia share. At the GWR closing price of 880p, up 5p, that equates to 469p. The cash alternative is being financed with a mix of bank facilities and new shares.
About 47,965 new shares have been placed with the Daily Mail and General Trust, which has just under 20 per cent of GWR, and 176,661 with Fidelity Investments.
If successful, the bid will mean that GWR holds 21 local radio licences - one more than allowed. But Ralph Bernard, chief executive, said it was well advanced on the sale of one of its Asian stations.
Mid Anglia, with licences in Peterborough, Cambridge, Newmarket and Kings Lynn, lost pounds 12,186 on turnover of pounds 2.14m in 1993. Mr Bernard said investment in programming and technology would make it as profitable as the group's other stations.
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