18th Dec 2007 10:19
18 December 2007 UTV Media plc Acquisition of FM104 and Share Placing
UTV Media plc ("UTV", "UTV Media" or the "Group") is pleased to announce today that it has agreed to acquire the entire issued share capital of Capital Radio Productions Limited and Babstova Limited(together "FM104") (the "Acquisition"), a leading radio broadcaster based in Dublin, for cash consideration of ¢â€š¬52.0 million (approximately ‚£37.1 million). FM104 is being sold by Communicorp Group Limited ("Communicorp").
Acquisition highlights:
* UTV Media is to acquire the entire issued share capital of FM104 for ¢â€š¬52.0 million (approximately ‚£37.1 million) on a cash-free and debt-free basis and subject to certain post completion adjustments. * FM104 is the leading commercial radio station in Dublin and is one of the most listened to radio stations in the city. * FM104 had a weekday share of all adults for the year to 30 September 2007 of 12.5% and weekly market reach of 31%, second only to RTE Radio 1. The station enjoys a market leading position with a 26% share in its key 15-34 year old age group. * For the 12 months to 31 March 2007, FM104 generated revenues of ¢â€š¬9.50 million, earnings before interest, tax, depreciation and amortisation (after adding back allocated management charges) of ¢â€š¬3.46 million and profit before tax of ¢â€š¬2.95 million. * The Acquisition will significantly enhance UTV's presence in the critical and highly competitive Dublin radio market and represents a further significant step in the implementation of UTV's stated strategy of building a network of leading radio stations in Ireland's key urban areas. * The Acquisition will be financed through new bank facilities and the placing of 2,740,000 new ordinary shares of 5p each through Goodbody Stockbrokers and Numis Securities Limited. * The Directors of UTV expect that the Acquisition will be accretive to EPS for the year to 31 December 2008. * The Acquisition is conditional inter alia on the approval of the Competition Authority, the Broadcasting Commission of Ireland ("BCI") and of the UTV shareholders in a general meeting. The Acquisition is also conditional on Communicorp completing the acquisition of FM104 from Scottish Radio Holdings Limited, a subsidiary of Emap plc.
Commenting on today's announcement, John McCann, Chief Executive of UTV Media said:
"I am absolutely delighted to announce this acquisition of FM104. Together with Q102 in Dublin and our stations in Cork, Limerick, Dundalk/Drogheda and Belfast, this acquisition enables our multimedia offering throughout Ireland to take a significant step forward and firmly reflects UTV Media's strategy of creating a diversified media business in the UK and Ireland. FM104 is the market leader in Dublin and we look forward to developing this position within UTV."
Goodbody Corporate Finance advised UTV on the Acquisition.
For further information contact:
UTV Media plc:Paul O'BrienGroup Finance Director
Telephone: + 44 (0) 28 90 262098
Orla McKibbin
Head of Press and PR
Telephone: + 44 (0) 28 90 262188
Powerscourt (Financial PR advisors)
Rory GodsonPaul DurmanSarah Daly
Telephone: +44 (0)207 250 1446
Goodbody Corporate Finance:
Kevin Keating
Telephone: + 353 (0) 1 667 0420
Numis Securities Limited:Jag MundiChristopher Wilkinson
Telephone: +44 (0) 207 260 1000
18 December 2007 UTV Media Plc Acquisition of FM104 and Share Placing 1. Introduction
UTV Media is pleased to announce that it has agreed to acquire FM104, a leading radio broadcaster based in Dublin, from Communicorp.
FM104 is the leading commercial radio station in Dublin and is one of the most listened to radio stations in the city. The station enjoys a market leading position with a 26% share in its key 15-34 year old age group.
Due to its size, the Acquisition is conditional upon the approval of the UTV shareholders in a general meeting. A circular will be sent to shareholders shortly containing information relating to the Acquisition together with a notice convening an Extraordinary General Meeting ("EGM") to consider and, if thought fit, approve the Acquisition.
2. Information on FM104
Established in 1989 as Capital Radio Productions Limited, the station was awarded one of two commercial licences to provide local radio broadcasting in Dublin City and County. Initially broadcasting under the name `Capital Radio', the station was renamed FM104 in 1992 and has since grown to become the leading independent commercial radio station in Dublin and one of the most listened to radio stations in the city.
The FM104 management team, led by Tim Fenn, Margaret Nelson and Dave Kelly have targeted the station at the key 15 to 34 year old age group by keeping the programming focused and building show brands within the overall station banner - including `The Strawberry Alarm Clock', the `FM104 Phoneshow' and `The Jam'.
For the year to 30 September 2007, FM104 had a weekday share of all adults of 12.5% and weekly market reach of 31%, second only to RTE Radio 1. The station enjoys a market leading position in each of the 15-34, 20-44, and 25-44 age groups.
3. Summary financial information on FM104
For the 12 months to 31 March 2007, FM104 achieved earnings before interest, tax, depreciation and amortisation (after adding back allocated management charges) ("EBITDA") of ¢â€š¬3.46 million and profit before tax of ¢â€š¬2.95 million on turnover of ¢â€š¬9.50 million. This represented growth of approximately 14% on the previous year when FM104 generated turnover of ¢â€š¬8.32 million and EBITDA of ¢â€š¬ 2.75 million.
FM104 had gross assets of ¢â€š¬5.00 million as at 31 March 2007.
4. Background to and reasons for Acquisition
The Acquisition represents a further significant step in the implementation of UTV's stated strategy of building a network of leading radio stations in Ireland's key urban areas. This network now includes Cork 96 & 103 FM, Limerick's Live 95FM, Louth/Meath's LMFM, Q102 in Dublin and U105 in Belfast. A combination of FM104 and UTV's existing station, Q102, would have a total weekday share in Dublin of 18.8%.
The Directors of UTV expect that the Acquisition will be accretive to earnings per share for the year to 31 December 2008.*
(*Note: This statement relates to future actions and circumstances, which, by their nature, involve risks, uncertainties and other factors. This statement does not constitute a profit forecast nor should it be interpreted to mean that future earnings per UTV share following the completion of the Acquisition will necessarily match or exceed historical earnings per UTV share. Earnings in this context represent net after tax earnings on an IFRS basis, excluding the amortisation of intangible assets and any exceptional items.)
5. Principal terms and conditions of the Acquisition
The Acquisition values FM104 at ¢â€š¬52.0 million (approximately ‚£37.1 million) on a cash-free and debt-free basis and subject to certain post completion adjustments.
The Acquisition is for the entire issued share capital of Capital Radio Productions Limited and Babstova Limited and is conditional on the approval of the Competition Authority, the Broadcasting Commission of Ireland ("BCI") and the shareholders of UTV. The Acquisition is also conditional on the prior acquisition of FM104 by Communicorp pursuant to a separate agreement between Communicorp and Scottish Radio Holdings Limited, a subsidiary of Emap plc.
The consideration is payable in cash on completion save for ‚£1.1 million (approximately ¢â€š¬1.6 million), being 1.0% of the market capitalisation of UTV based on the closing market price on the London Stock Exchange on 17 December 2007 ("Break Fee"). The Break Fee will be paid on or before 20 December 2007.
If UTV fails to obtain approval for the Acquisition from shareholders, the Competition Authority or the BCI within a period ending 121 days after the required notification of the Acquisition is made to the Competition Authority, Communicorp will be entitled to retain the Break Fee. For the avoidance of doubt, if the Acquisition is completed as expected, the Break Fee will represent part of the consideration payable.
Applications for the approval of the Acquisition will be submitted to the Competition Authority and the BCI in due course.
The share purchase agreement contains representations and warranties of a type customary for a transaction of the nature of the Acquisition.
6. Financing the Acquisition
The Acquisition will be financed by a combination of new bank debt and the issue of new ordinary shares.
The debt element of the consideration to be paid to Communicorp will by financed from a ¢â€š¬60 million (approximately ‚£42.8 million) new bank facility from one of UTV's principal bankers, the Bank of Ireland.
In addition, UTV has today entered arrangements with Goodbody Stockbrokers and Numis Securities Limited in respect of an equity placing ("Placing") of 2,740,000 new ordinary shares of 5p in UTV Media plc ("Placing Shares"). The Placing Shares, representing 5% of UTV's issued ordinary share capital prior to the Placing, will be priced in accordance with demand to be solicited by Goodbody Stockbrokers ("Goodbody") and Numis Securities Limited ("Numis") through a book-building process. Certain of the Directors and senior management of UTV have expressed to Goodbody and Numis, their interest in participating in the Placing. Any Placing Shares placed with UTV Directors and/or senior management will be placed on a pari passu basis with other placees.
If the Acquisition does not complete, UTV will use the funds raised in the Placing for further investment opportunities or for general corporate purposes.
7. Current trading and prospects
Overall, the Group's current trading is in line with the Directors' expectations and is consistent with comments made in the interim results announcement dated 30 August 2007.
The Group previously noted that the UK radio advertising market was showing signs of recovery, with growth of 6% being predicted for Q3 2007. This trend has improved through the remainder of the second half of the year. As a result, the Directors remain positive about the Great Britain ("G.B.") radio business, which has experienced significant growth since the acquisition of the Wireless Group plc in June 2005. talkSPORT continues to outperform the market as it delivers strong audience numbers and excellent demographics, while the recovery plan which has been implemented at the Group's local radio stations in G.B. is beginning to improve operational performance. UTV has invested in a number of initiatives, particularly in strengthening the G.B. radio management team with a view to delivering additional growth.
Further investment will be evidenced next year by the launch of two new radio stations. talkRADIO will be UTV's second national station in G.B. and will be a speech format station on the second national digital multiplex. UTV will also launch an FM licence for the Preston area. These two launches will have a short to medium term impact on profitability as an estimated ‚£4 million will be invested over the next two years in start up costs. The Directors of UTV believe that these assets will prove to be excellent long term investments for the Group.
The Group's radio business in Ireland continues to show solid performance despite growth tapering down in the Irish economy. The key urban market proposition that UTV is able to offer advertisers will be greatly enhanced by the addition of FM104, giving the Group a leading position in Ireland's capital city to complement our radio stations in Cork, Limerick, Dundalk/Drogheda and Belfast.
UTV has put considerable effort into remedying the issues which led to underperformance in its local Irish radio advertising revenue in Q2 2007 and an improving position is now starting to emerge. In the second half, advertising revenue from UTV's radio stations in Ireland is expected to be up by 6% on the same period in 2006.
The underperformance in our television revenues in the third quarter has been offset by an improved performance in the fourth quarter leading to a full year outperformance of the ITV network.The Directors of UTV are encouraged by the improved audience performance of ITV1 and this coupled with projected modest market growth should bode well for the Group's television business in 2008.
The Group expects to announce its preliminary results for the year to 31 December 2007 on 13 March 2008.
8. Shareholder circular and outline timetable
UTV intends to send a circular to shareholders shortly, giving further details of the Acquisition and including notice of the EGM to consider, and, if thought fit, approve the Acquisition. A separate announcement will be made in due course to confirm the despatch of the circular and date of the EGM. Completion of the Acquisition is expected to occur, subject to shareholder, BCI and Competition Authority approval, shortly after the EGM.
Note: This announcement assumes an exchange rate of ¢â€š¬1 = ‚£0.71296 throughout.
Goodbody Corporate Finance and Goodbody Stockbrokers which are regulated in Ireland by the Financial Regulator, are acting exclusively as financial adviser and corporate broker respectively for UTV and no one else in connection with the Acquisition and will not be responsible to anyone other than UTV for providing the protections afforded to their clients or for providing advice in relation to the Acquisition or in relation to the contents of this announcement, or for any other transaction, arrangement or matters referred to in this announcement.
Numis Securities Limited, which is authorised and regulated by the Financial Services Authority, is acting as corporate broker for UTV and for no-one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than UTV for providing the protections afforded to customers of Numis Securities Limited nor for giving advice in relation to the matters referred to in this announcement.
UTV MEDIA PLCRelated Shares:
WLG.L