Completed acquisition by Global Radio UK Ltd of GCap Media plc

Affected market: Radio advertising

No. ME/3638/08

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, and decision.

The OFT's decision on reference under section 22(1) given on 8 August 2008.  Full text of decision published on 27 August 2008.

Please note that square brackets indicate figures or text which have been deleted or replaced at the request of the parties for reasons of commercial confidentiality.

PARTIES

Global Radio UK Limited (Global) is a privately-owned UK based commercial radio group, the activities of which comprise nine local radio analogue stations grouped under three principal brands (Heart, Galaxy and LBC). These stations are also broadcast on DAB digital radio. Globals stations are essentially limited to London, the Midlands and the North of England. Global owns one digital-only station (The Arrow) and has a [ ] per cent stake in MXR Limited which itself owns 5 multiplex licences. For the financial year 2007, Globals turnover was approximately £[ ]. Global accounted in 2007 for approximately 10 per cent of all UK commercial radio revenues.

GCap Media plc (GCap) is a public company listed on the London Stock Exchange. It was formed by the merger of Capital Radio plc and GWR plc in May 2005 and owns a portfolio of 71 local analogue radio licences across the UK, as well as the Classic FM national station. Many of these stations are also broadcast on DAB digital radio. GCap owns one digital-only station, and 22 digital multiplex licences, four of which have not yet been launched. It has interests in 10 further multiplex licences in conjunction with third parties such as Bauer, Arqiva and Global. For the financial year 2007, its turnover was some £200 million. GCap accounted in 2007 for approximately a third of all UK commercial radio revenues. In addition, GCap Media Services Limited is appointed as GMG Radio Holding Limiteds exclusive agent in relation to the sale of GMGs airtime to national advertisers. 
 
TRANSACTION

On 31 March 2008, a wholly owned subsidiary of Global announced that it had reached an agreement to acquire the entire share capital of GCap for approximately £375 million (225 pence per share in cash).

The transaction was completed on 6 June 2008. The OFT accepted initial undertakings from Global on 6 June 2008. The OFT's statutory deadline in this case is 6 October 2008. The parties submitted an informal merger notification on 23 May 2008. The OFT's extended administrative deadline expired on 31 July 2008.

JURISDICTION

As a result of this transaction Global and GCap have ceased to be distinct. The UK turnover of GCap exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

DECISION

The OFT's duty to refer the completed acquisition by Global of GCap to the Competition Commission pursuant to section 22 of the Act is suspended because the OFT is considering whether to accept undertakings in lieu of reference under section 73 of the Act.

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