THE UK'S largest commercial radio group, GCap Media, yesterday rejected an improved offer of £333 million from rival Global Radio, which is backed by a number of wealthy Irish businessman, including JP McManus, John Magnier, Dermot Desmond and Denis Brosnan. Ciarán Hancock, Business Affairs Correspondent, reports.

A statement from GCap said the revised offer, which was received by its board on Thursday, "significantly undervalues" the troubled radio group because it "does not reflect the value that would be created by implementing the strategy" of new chief executive Fru Hazlitt, which was outlined on February 11th.

In addition, GCap's board said the offer did not reflect the "unique assets" for any acquirer and "fails to take account of the synergies that are likely to be available from consolidation".

It added that the level of conditionality attached to the bid was "unacceptable" as it did not offer a "sufficient degree of certainty of successful completion".

Global's revised offer values GCap at £2.02 a share. It had previously offered £1.90 a share for GCap in early January, which valued the radio operator at £313 million.

Incorporated in Jersey, Global Radio is led by former ITV chief executive Charles Allen. Other investors include racehorse owner Michael Tabor and his son, Ashley. The consortium acquired Chrysalis Radio for £170 million last August. Global's stations include Heart, Galaxy and LBC, and it is the third-biggest commercial radio player in the UK, with six million listeners each week.

GCap's stations include Capital Radio and Classic FM and it has about 17 million listeners a week. Its heartland is London and the south of England.

GCap said the latest approach was subject to a number of conditions, including due diligence and finalisation of financing facilities.

GCap said Hazlitt's strategy would position it for sustainable revenue growth. It was targeting operating margin ranges of 12-14 per cent in the year ending March 2009 and 17-19 per cent in the year ending March 2010.

It expects to achieve a full-year profit improvement of £12.3 million.

GCap's shares closed in London yesterday down 5 pence at 190.75 pence. Its market capitalisation is £315 million.

In late November, GCap posted a pretax loss of £5.1 million for the six months to the end of September and said its revenues for the period had declined by £2 million year-on-year to £100 million.

No comment was available from Global Radio.