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Monday, September 6, 1999 Published at 19:01 GMT

UK: Scotland

SMG takes stake in Hearts

Hearts keeper Giles Rousset in action at Tynecastle

The Scottish Media Group has confirmed it is buying a 20% stake in Scottish Premier League football club Heart of Midlothian for £8m.

BBC Scotland's Isabel Fraser reports on where the money will be spent
SMG aims to raise Hearts' media profile and increase revenues from merchandising and other brand-related areas.

The deal is similar to recent ones in England which have seen Granada buy a stake in Liverpool and BskyB purchase a shares of Leeds United.

[ image: Chris Robinson:
Chris Robinson: "SMG right partner"
Hearts Chief Executive Chris Robinson told BBC Scotland: "There's certainly going to be investment particularly in the playing squad.

"We're going to look to build a first-class youth academy and we will put some money into continuing to develop the stadium.

"It's an investment in the club by a strong partner who we believe is the right partner for Hearts Football Club in the medium term."

Mr Robinson said SMG's day-to-day involvement in the club would be mainly in merchandising, and that the group would also have a director on the board.

Hearts Chief Executive Chris Robinson: "Fans will welcome the deal"
But the deal sees Hearts Vice-chairman Leslie Deans stepping down from the board although he will continue to play a part at Tynecastle as an investor.

SMG, which owns Scottish and Grampian Television as well as the Herald newspaper group, confirmed last week that it is in talks which could see it increase its stake in the breakfast broadcaster GMTV.

The group's Chief Executive Andrew Flanagan said: "Our investment will help cement a successful long-term media partnership between Scottish Media Group and Hearts.

[ image: SMG will have a director on the board]
SMG will have a director on the board
"We are confident that the funds we have made available will be wisely invested in helping Hearts to realise the full potential of the club and we look forward to working with Hearts across a wide range of exciting projects."

SMG is to subscribe for 2,514,093 new shares in Hearts at 140 pence per share to give it an inital 19.9 percent stake in the club.

Investment analyst Bill McCall looks at the SMG-Hearts deal
It is also investing £4.48m in convertible loan stock, which could take its stake to more than 37% after four years.

A stake of this size would normally trigger a full takeover bid.

However SMG said the Takeover Panel, which oversees takeover activity on the London Stock Exchange, had agreed to waive this requirement.

Hearts reported pre-tax profit of £222,000 in the year to 31 July, following a loss of £1.94m a year ago.

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