Shares in Thames TV, Britain’s largest independent production company, were suspended yesterday pending an announcement concerning a proposed bid by media conglomerate Pearson.Representatives at Pearson and Thorn EMI, which is Thames’ majority shareholder, confirmed that talks had taken place but denied that agreement had been reached. The suspension of Thames’ shares, a move designed to prevent a false market in the company stock, followed a press report in London’s Financial Times suggesting the Pearson bid was imminent. Pearson is the parent company of the Financial Times. Thames shares gained 32 pence after the story appeared. When dealing was suspended, the stock stood at 221 pence. Market-makers said the price increase was achieved on virtually no volume, as shareholders held onto the stock in anticipation of a high bid-price. At 221 pence, Thames is worth about T110 million ($ 164 million). According to analysts, this would be a fair price to pay for the company, which recently lost its ITV broadcasting franchise. If Pearson agrees to terms with Thorn EMI, it will be obliged under Stock Exchange rules to extend the offer to the minority shareholders. The deal is not a foregone conclusion. Whether Pearson makes a bid will depend on the price and the cost of assuming various liabilities and obligations. The company has walked away from previous deals at the last minute because the terms were deemed to be unfavorable. Thames TV recently reorganized its operations as part of a new strategy following the loss of its main business, the ITV weekday franchise for the London area. The company has reduced staff dramatically and rationalized its business into three units. Thames is the biggest supplier of programs to the ITV web and is emerging as the dominant indie producer in the U.K. market. On Monday, Pearson announced downbeat results for 1992, showing a 16% fall in pre-tax net income to T150.8 million ($ 224.7 million) on sales of T1.64 billion ($ 2.44 billion), an increase of 2.2% over the previous year. The weak performance was the result, according to the company, of restructuring costs in its oil-services division. According to analysts, Pearson is a much stronger company than its profit-and-loss statement might imply. The company follows extremely conservative accounting policies which could be said to understate the value of its assets. It has a strong balance sheet and healthy cash flows. The bid for Thames comes after indications from the company that it wants to expand its media and entertainment interests, which performed very strongly last year. Pearson is a significant shareholder in six-channel satellite service BSkyB. Were Thorn EMI to sell its stake in Thames, it would be consistent with chief exec Colin Southgate’s determination to rationalize the once extensive conglom to two major businesses: recorded music and consumer rentals.
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