More on Emap
Emap offer for SRH
SRH’s board has rejected Emap’s request that it recommend an offer at 1040p.
Although this is only a 4% premium on the current price, it is an 18% premium on the price before Emap announced that it had approached SRH with an offer of 1040p. Even this 18% premium was reduced because Emap’s (potential) interest in buying SRH has been supporting SRH’s price even before it was confirmed on 31st March.
The logic of the combination is obvious given the consolidating radio sub-sector (most significantly the recent merger of Capital and GWR to form GCap). The market seems to believe that SRH is likely to be acquired by Emap (it is trading at 1000p, evidently supported by the offer). It is probable that Emap will acquire SRH, the question is at what price?
SRH is expensive, although not particularly so against the radio sub-sector, at a prospective PE of 19 ×. However the sector is probably somewhat over valued, but SRH is supported by the offer from Emap.
Emap’s price has not moved since we last looked at it.
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