Granada Shareholders Uneasy Over ITV Merger Deal
Granada shareholders are growing increasingly unhappy over the terms of the proposed £2.6 billion merger with Carlton Communications and are concerned about whether they are getting a fair deal.
Under the current terms of the ITV merger, Carlton shareholders would get 32% of the combined group and Granada would get 68%, reflecting the latter’s larger business and stronger balance sheet. Granada shareholders would receive an additional £200 million in cash on completion of the deal and Carlton could get more shares if performance targets were met (see Carlton/Granada Move Closer To £2.6bn Single ITV Company).
However, since the announcement was made last October, Granada’s shares have risen by around 38% and Carlton’s by just 32%. Analysts suggest this reflects the uncertainty over the merger’s chances with the Competition Commission and the potentially greater attraction that Granada has on its own.
Granada chairman, Charles Allen, is also thought to have concerns over the deal, but reportedly fears that raising the issue with Carlton could scupper the merger, which is the product of years of negotiation.
Last week advertisers strengthened their opposition to the creation of a single ITV company and branded plans to regulate the way in which it sells airtime advertising as “flawed, complex and dangerously open to abuse” (see Advertisers Strengthen Opposition To ITV Merger). The Competition Commission has been granted an extra two months to investigate the deal and will now report back to Trade and Industry Secretary Patricia Hewitt on 26 August (see Competition Commission Delays Verdict On ITV Merger).
Shares in Granada were up 0.25p at 91.5p at 1pm today.
