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Last Updated: Friday, 18 August 2006, 10:03 GMT 11:03 UK
Merger move for Virgin Radio firm
Radio DJ talking into microphone
Both companies have major commercial radio interests
SMG, the owner of Virgin Radio and the Scottish broadcaster STV, has received a merger proposal from Ulster Television (UTV).

SMG said that it would own 50% of the merged company under the proposal, reported to be worth 400m ($754m).

Both firms have major radio interests. Last year UTV bought the Wireless Group which includes TalkSport.

SMG's other assets include cinema advertising business Pearl & Dean and TV production firm Ginger Productions.

UTV also owns 16 independent radio stations including Juice FM in Liverpool and Swansea Sound.

The Times newspaper put the 400m price tag on the deal, saying UTV's adviser Numis Securities had conducted talks with SMG's representative adviser Citigroup to "consider a merger of equals".

Potential obstacle

BBC Scotland's business correspondent Jamie McIvor said there had been speculation for some time that UTV was interested in a move for SMG.

"It would unite the two main parts of Britain's main commercial TV network which aren't owned by ITV," he said.

"But there could be one major obstacle to a deal as things stand. UTV is proposing a 50-50 merger of equals but SMG is worth more on the stock market than UTV."

The deal was unlikely to happen without the approval of ITV plc, which runs the network in England, Wales and the Scottish Borders, he added.

ITV is one of SMG's main shareholders and there's long been speculation that it would eventually try to buy STV to further consolidate the network.

SMG's shares closed up 2.8% at 72 pence.

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