Surely Emap could have picked a more appropriate day to announce it was buying the remaining 73% stake in Scottish Radio Holdings (SRH) it doesn't already own? asks Fiona Maharg-Bravo on Breakingviews.com. It was, after all, the same day that two of the UK's biggest radio players, GCap and Chrysalis, said that their advertising revenues had taken a sharp tumble. Moreover, the industry's future doesn't look all that good either.
Yet despite this, the Emap/SRH combination is a good one: both groups have "strong regional franchises with no overlap", says Maharg-Bravo. And the merger has now created the second largest operator, owning 26% of the market share, says Lex in the FT.
The "strategic imperative" is reflected in the price that Emap paid for SRH. At £10.88 a share, the offer is a 25% premium to SRH's closing price before news of the potential merger impacted on the price. That's rather "full", says Lex, albeit below the £11 that SRH shareholders demanded. The acquisition should also hike earnings in the first year, while Emap managed to dump SRH's newspaper business for some £155 at least £10m above what the analysts had expected, says Maharg-Bravo.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
But as radio advertising stumbles, weakening the radio market, and the French and UK consumers rein in their spending, which looks likely to hit Emap's magazine business, the risk for Emap just doesn't want to go away.
-
Private school fees soar and VAT threat looms – what does it mean for you?Rising private school fees could see more than one in five parents pull their children out of their current school. Before you remortgage, move house or look to grandparents for help, here’s what you need to know.
-
Best and worst UK banks for online banking revealedWhen it comes to keeping your money safe, not all banks are equal. We reveal the best and worst banks for online banking when it comes to protecting your money from scams
