Emap 'disappointed' as SRH rejects buyout offer

by Joe Lepper, Brand Republic 01-Jun-05, 13:00

LONDON - Scottish Radio Holdings has rejected a 1040p-a-share buyout offer from Emap, which already has a 27% share in the firm, saying that the offer undervalues the firm.

In a statement issued to the London Stock Exchange today, Emap confirmed it had finally tabled a bid, only to see it rejected by SRH's board.

"The board of Emap is disappointed by this reaction to a proposal which it believes fully values SRH, both on the basis of its current performance and its future prospects, as well as crystallising a premium for control."

SRH's share price has not closed at or above 1040p since summer 2001 and Emap has indicated it will review the situation.

SRH said that Emap's valuation of the its core radio business was referenced to a 2006 Ebitda multiple of less than 10, which it says is at a significant discount to current market estimates of rival GCap's 2006 multiples.

"Furthermore, Emap had not ascribed a value to SRH's Vibe stations beyond their development stage cash flows, despite the fact that the recent precedent of Chrysalis' acquisition of 106 Century FM would suggest a much greater value for these turnaround stations," SRH said.

The board of SRH said it is confident about the independent future of the company and believes SRH is well placed to continue to generate significant long term shareholder value. It said it would only support a bid that reflected the radio firm's true value.

"The board would only support a bid that adequately reflects the full and fair value of the company's strong future growth prospects. In light of this, the board of SRH believed a 2006 Ebidta multiple of less than 10 and the low value attributed by Emap to the Vibe stations significantly undervalued the Company."

An offer from Emap for SRH, which owns stations including Radio Clyde, Radio Forth and Northern Ireland's Cool FM, has been the subject of speculation for a number of months in the City.

In November, SRH confirmed it had hired a financial adviser, and a recent green light from regulators for the merger of Capital Radio and GWR has also heightened speculation that a move by Emap for SRH was likely.

Emap's shareholding in SRH was bought in January 2004 at 930p a share. Following this latest announcement, SRH's share price rose 15.4% to 1007p this morning.

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