SMG Rejects 3i Offer For Virgin Radio
Glasgow-based Scottish Media Group (SMG) has turned down a £100 million offer for Virgin Radio from private equity group, 3i, according to industry reports.
The take-over bid started in December, but to no avail after SMG rejected the offer of Lord Alli, the media heavyweight spearheading 3i’s bid. Reports indicate that 3i has threatened to increase the pressure on SMG by directly approaching shareholders after the rejection.
Yesterday, SMG received a letter emphasising the equity group’s offer. Commenting on the situation, Lord Alli said: “We have written to SMG again, saying would you reconsider, but I don’t think they have spoken to their shareholders. I want to begin a process of making sure that their shareholders know that we have put a bid out there, and it is one that they should consider seriously.”
ITV plc is currently the largest shareholder in SMG, holding 16.9% of the company, the broadcaster has been cited as the possible future owner of Virgin radio and is the most likely buyer of the Glasgow based group core assets, Grampian TV and Scottish TV.
SMG’s second largest shareholder is investment firm Fidelity, holding 10.3% of the company, followed by Morgan Stanley with 4%.
SMG confirmed that it had received an approach from 3i and said: “We receive approaches like this all the time, which is not surprising, given Virgin Radio’s attractive business, but we never discuss approaches of this nature. However, there is nothing under consideration by SMG at present.”
Rumours of SMG’s possible disposal of Virgin Radio started last June, when the Group was thought to be sounding out potential buyers for the station. It was believed that the Scottish media conglomerate hoped to sell Virgin for £130 million.
Virgin radio has recently been struggling with falling profits, with a trading statement released in September 2004 revealing that operating profits for the station had fallen to £2.5 million from £3.0 million for the same period in 2003, while turnover was also reported to be down to £10.2 million from £11.8 million.
The most recent RAJAR results revealed that the company lost 4.4% of its weekly reach year on year in the six months to December, but that it managed to maintain its 1.4% audience share.
Virgin Radio: 020 7434 1215 www.virginradio.co.uk
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