NEWS: EMAP PREPARES TAKEOVER BID FOR SCOTTISH RADIO HOLDINGS by GRANT GODDARD

www.grantgoddard.co.uk January 2005

The field is open for EMAP plc to mount an takeover bid for Scottish Radio Holdings plc [SRH], now that a year has passed since it purchased a 27.8% stake in the company. Under takeover rules, a bid could not be made until SRH shares had risen above the 930p price that EMAP paid last year. Last week, shares leapt beyond the 970p mark, opening the way for a full bid. One unnamed industry commentator told the local press: "If EMAP wants to buy SRH, it is going to have to pay top dollar," while City brokerage Bridgewell Securities predicted that EMAP may have to pay as much as 1100p per share. Media analysts seem to be agreed that EMAP has nothing to gain by waiting, particularly now that the Capital/GWR merger is going ahead at full steam after clearing competition hurdles. "Once you have got a 28% stake, you are indicating that you are looking to take full control," said Paul Richards, media analyst at Numis. "EMAP are not in the habit of buying 28% stakes in listed companies. Everyone is expecting EMAP to bid for SRH. The question is timing and price. It's not as if SRH is a badly performing business." The remaining 72.2% of SRH is worth about 250m, but EMAP will have to offer a premium to shareholders and assume SRHs accumulated debt of 44m. An unnamed EMAP source told the local press that nothing was imminent and added that a bid was now completely dependent on price. EMAP's chief executive Tom Moloney and finance director Gary Hughes spent several days last week making presentations to city analysts and institutional investors. Andrew Walsh, media analyst at Bridgewell Securities, told the press afterwards that he learnt that EMAPs radio division had had a good start to its final quarter, and pointed out that its shares trade on a forward earnings multiple of only 13, almost the same as some of EMAPs smaller competitors. Meanwhile, SRH has dropped Bell Lawrie White as its joint stockbroker, following shareholder concern that SRH non-executive director Jamie Matheson works full-time for the securities house. Asked about the change, Matheson, who is also a director of Bell Lawrie White parent company Bewin Dolphin, told the press: There isn't a move. We haven't acted corporately for them for a very long time. There is nothing to it. It is simply something that has been rectified as a matter of record. There has been no business relationship for a very long time. There has been no activity, no fees paid, nothing. All that has changed is printed words. Nothing else. It is a non-event. It is not even worth commenting on." At the SRH annual general meeting in 2001, 4.5% of voted shares had opposed Mathesons election to the board, and 12% opposed his re-election in 2002. Now that Bell Lawrie White has been dropped, Investec Henderson Crosthwaite becomes SRHs sole broker.
[First published in 'The Radio Magazine' as 'EMAP Readies SRH Bid', #668, 29 January 2005]

Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of experience in the broadcasting industry, having held senior management and consultancy roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at http://www.grantgoddard.co.uk

News: EMAP Prepares Takeover Bid For Scottish Radio Holdings 2005 Grant Goddard

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