UTV In Fresh Merger Talks With SMG

UTV have confirmed that they are back in talks with Scottish Media Group (SMG) over a potential merger.
In August SMG, the sixth largest programme producer in the UK, rejected an approach from UTV that would have given SMG shareholders a 52% stake in the combined company. Reports circulating at the time suggested that the owner of Virgin Radio had a higher market capitalisation that UTV, which would have seen shareholders lose out.
UTV was not allowed to enter formal discussions for six months following its last approach, unless it was invited to do so by the SMG board.
City rules stipulate that UTV was barred from proposing a deal until March.
In a statement SMG said it had been approached by UTV regarding a "possible nil premium merger of SMG and UTV, based on relative market values."
UTV said in a statement: "UTV confirms that it has made a further approach to SMG plc on 23 November regarding a merger proposal, for which it is seeking a recommendation from the Board of SMG. As a result SMG has agreed to enter into discussions with UTV, which may or not lead to a merger.
"UTV notes there can be no certainity that an offer will be made nor as to the terms on which any offer might be made. UTV will keep its shareholders updated as to developments."
SMG has suspended its search for a Chief Executive while merger discussions ensue.
SMG also said that it was making "good progress" on the disposals of its advertising businesses Primesight and Pearl & Dean.
According to reports a deal between SMG and UTV, the owner of the ITV franchise in Northern Ireland and TalkSport radio, would create a £400m Celtic media powerhouse.
The UTV Chief executive John McCann is being seen by industry insiders, as being the most likely candidate to lead a combined group.
Since SMG issues a profit warning in October, its market capitalisation has fallen below that of UTV. Latest reports suggest that SMG is worth around £180m, while UTV is capitalised at about £210m.
Radio and television presenter Chris Evans still holds nearly 10 million SMG shares, or just over 3% of the company, after he sold Virgin Radio and his TV company Ginger Productions to SMG three years ago for £225 million.
SMG Television incorporates STV, SMG Productions, Ginger Productions and SMG solutions.
UTV operates 24 stations including TalkSport.
UTV has the highest penetration of all media in Northern Ireland, with more than 90% of the population reached over a four week period and UTV is also available in more than 63% of homes in Ireland.
(DS)