Granada raises £1.3bn warchest

Manchester is the home of Granada TV

Granada Media raised £1.3bn from its flotation on Tuesday.

The flotation valued the company at £7.5bn, with its shares launched at a price of 515p. Its shares jumped to 555p in early trade.

The company - which has been spun off from its hospitality and media parent Granada Group - will now have about £2bn in cash from the sale of the 18% stake and the merger of its TV rental arm with Thorn.

It is expected to use this cash to make a bid for either Carlton Communications or United News & Media.

ITV carve up

The company's rivals are waiting for regulatory clearance for a merger.

The Competition Commission has passed its recommendation to the Trade Secretary Stephen Byers.

Granada has also asked for clearance to buy either of its two rivals.

Mr Byers is expected to make his decision either this week or next.

If the Carlton/United News & Media deal was approved, Granada is poised to gatecrash the merger and launch its own bid for one of the two companies.

Coronation Street

An alternative is that the three companies could agree to carve up the ITV network between them, avoiding a takeover battle.

Granada recently merged with contract caterer Compass and split its media interests into a separate company.

The media company includes Granada TV, producers of soap opera Coronation Street, London Weekend Television and Yorkshire Tyne Tees.

It includes a programme production business, a broadcasting division, a new media business and a commercial arm.