ITV companies looked set for a further round of consolidation yesterday as Scottish Media Group, formerly Scottish Television, confirmed it was in talks about acquiring its neighbour, Grampian Television, for pounds 105m.
Scottish said discussions may lead to a deal being struck at around 320p a share. The price would top City expectations as analysts have in the past claimed the company would be worth no more than pounds 100m, or around 300p a share. The offer is also significantly above Grampian's year- high price of 291.5p and its closing price last Friday of 265p.
Rumours of the takeover have been circulating for some time and intensified last October when Scottish sold its 20 per cent stake in HTV to Lord Hollick's United News & Media. The sale gave Scottish a pounds 73.6m cash-pile which observers widely expected would be used to consolidate its position north of the border.
Talks between Scottish and Grampian at the end of last year reportedly broke down after the two companies failed to agree on price. However, the pair already enjoy a certain level of co-operation with their joint interactive service, OKTV.
The deal, if it goes ahead, would be the latest in a wave of mergers in the television sector, made possible by the 1996 Broadcasting Act which revised the rules on media ownership.
Carlton Communications bought Westcountry Television for pounds 85m last autumn and Granada is expected to make a bid for Yorkshire-Tyne Tees Television. Scottish has itself been mentioned as a target, and has been busily expanding over the past year to avoid being taken over.
Last July it announced the pounds 120m acquisition of Caledonian Newspapers, publisher of the Glasgow-based Herald.
It has also been rumoured that Gus Macdonald, chairman of Scottish, and Andrew Flanagan, managing director, would be keen to expand southwards by buying their other neighbour, Border Television.
A spokesman confirmed last night that the board of Scottish and Grampian had met to discuss a possible merger. He added that a further announcement would be made "as soon as appropriate".
However, he would not be drawn on the size of inevitable cost-cutting, nor the implications for its two main shareholders, Flextech, the cable programme supplier, and Mirror Group, both of which own a 20 per cent stake in Scottish.
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