GCap, owner of Classic FM and Capital, admitted this morning that it had received a 190p-per-share bid from Global, which owns Heart and LBC. Since this valued the company nearly 60% higher than its closing price on Friday, GCap did the obvious thing and rejected it immediately. Apparently the board believe that it ‘significantly undervalued the company,’ it said today.
However, some of GCap’s shareholders don’t agree. With the radio advertising market looking increasingly doomed – why pay for radio jingles when you can pay for annoying online pop-ups instead? – and with dozens of stations competing for our attention in London, GCap’s operating in a tough business. Some of its shareholders might have been grateful for the chance to cash out at this kind of price. At the very least, they would probably have appreciated some choice in the matter – according to the Times, one of its biggest shareholders didn’t even know about the offer until he read about it in the newspaper, which he was understandably miffed about.
Apparently, GCap wants to give its newly-appointed chief executive Fru Hazlitt a chance to revive its fortunes. Hazlitt only got the job in December, and hasn’t even outlined her turnaround plans yet – but she’s going to have to go some to get the share price up above 190p, given that on Friday it was languishing at 121p.
The takeover speculation pushed the price above 180p this morning (a massive 50% jump) – but this won’t last if Global walks away. So far the would-be suitor has been playing it cool, saying in a statement that it was ‘currently considering its position’. But it probably wasn’t impressed that its bid was dismissed so quickly, given the big premium it was offering.
It’s easy to see why GCap wants to stay out of Global’s clutches – but turning down such a big offer puts Hazlitt under big pressure to perform. Let’s hope she’s up to it...