GCap radio group confirms rejection of £315m takeover

The UK's largest commercial radio group, GCap Media, yesterday confirmed that it had rejected a £315 million takeover approach from rival Global Radio, which is backed by wealthy Irish businessmen John Magnier, JP McManus, Dermot Desmond and Denis Brosnan.

GCap's share price soared by 45 per cent on confirmation of the approach. The shares closed in London at £1.76, up 55 pence on the day.

Incorporated in Jersey, Global Radio is led by former ITV chief executive Charles Allen. Other investors include racehorse owner Michael Tabor and his son, Ashley.

The consortium acquired Chrysalis Radio for £170 million last August.

Its stations include Heart, Galaxy and LBC, and it is the third-biggest commercial radio player in the UK with six million listeners each week.

In a statement to the London stock exchange, GCap said it had "recently received and rejected an indicative and conditional proposal from Global Radio regarding a possible offer for GCap at a price of 190 pence per share in cash".

It said the offer was rejected "on the basis that the board believed that it significantly undervalued the company".

GCap added that its recently-appointed chief executive, Fru Hazlitt, would outline her plans for the business shortly.

"There can be no certainty that any offer will be made nor as to the terms on which any offer might be made," the GCap statement concluded.

GCap's stations include Capital Radio and Classic FM and it has about 17 million listeners a week. Its heartland is London and the south of England.

Global Radio confirmed that it had made an offer to GCap.

"This approach was conditional on limited due diligence and the recommendation of the GCap board for any offer," the group said.

"Global Radio is currently considering its position."

Analysts described Global Radio's offer as generous considering the tough radio advertising market being experience in the UK and disappointing financial performance of GCap since the £710 million merger of Capital Radio and GWR in 2005.

In August, GCap's shares were trading in London at £2.50 apiece but have declined steadily since then.

In late November, GCap reported a pre-tax loss of £5.1 million for the six months to the end of September and said its revenues for the six-month period had declined by £2 million year-on-year to £100 million.