UK-listed media group Emap has offered shareholders a more tax efficient share structure as it looks to protect the likely proceeds of its forthcoming break-up.
Emap, the £1.79 billion (£2.64 billion; $3.56 billion) group that is set to sell its three constituent divisions, is offering shareholders the option to receive B-shares rather than cash in the event of a sale.
Taking the shares would be more tax efficient for shareholders as they will be able to roll over the redemption of the shares into the next tax year, allowing them to benefit fully from the current capital gains tax rules.
The move demonstrates that Emap is keen to smooth the path of the likely sale of the group, which has attracted substantial attention from private equity bidders.
The media group decided to proceed with a break-up rather than a sale on the grounds that it could attract a greater range of bidders, and thus generate more value for its shareholders – perhaps as much as 20 percent more than its current market capitalisation, according to banking sources.
It is currently auctioning its three divisions separately: the business publishing arm, which is valued at about £1.3 billion, the consumer magazine arm, valued at around £750 million, and the radio division, thought to be worth about £400 million.
Several private equity firms have reportedly expressed an interest in the various divisions, including Apax Partners, which has been on the acquisition trail in the business publishing sector since buying Incisive Media last year. However, the recent credit crunch has made financing bids more difficult.
Most of the proceeds will be returned to shareholders, though some will be used to pay down the company’s debt, which currently stands at £250 million.
At 13:58 BST, Emap shares were trading up 7 pence at 828.50 pence, giving the company a market capitalisation of £1.79 billion.
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