Both Capital’s chief executive David Mansfield and Ralph Bernard GWR’s chairman are thought to want to run any merged company

Both Capital’s chief executive, David Mansfield, and Ralph Bernard, GWR’s chairman, are thought to want to run any merged company.. GWR also has dozens of local stations in its regional network. Crucially, most believe that the deal would get past competition watchdogs.Paul Richards, an analyst at Numis Securities, said: “The industrial logic is compelling. Capital-GWR is the dream deal for the UK radio sector.” Mr Richards put cost savings possible through the deal at £8m.Capital Radio shares jumped 5 per cent to 420p, as 1.15 million shares changed hands – three times the average volume GWR gained 4.25p to 255p Both Capital and GWR declined to comment. Although some are convinced that a deal is imminent, others in the City and industry are more sceptical.One source said: “Conversations have certainly taken place but I don’t believe they’re at the stage where a definite ‘go’ button can be pressed.”Another senior industry source said Capital Radio was being pressured by shareholders to do a deal and although it had entered talks, management did not favour a deal.

He added that it was also unclear whether Daily Mail & General Trust, a 29.9 per cent shareholder in GWR, supported a merger.Peter Williams, the finance director of DMGT, who also sits on the GWR board, said: “We remain open-minded. Both companies have roughly the same stock market value and a merger would create a combined business worth £700m with 40 per cent of the radio advertising market. It is thought that a nil-premium all-shares merger would be the most likely structure for the deal. Speculation is growing that Capital Radio and GWR, the owner of the Classic FM station, are in advanced merger talks, pushing up shares in both radio companies yesterday.
Some City and industry sources say the companies are working towards an agreed deal by the end of this year.One insider suggested that draft announcements about the deal had been drawn up in recent weeks but last-minute hitches had prolonged the talks.All the major radio groups have sounded each other out over possible mergers, as such deals are allowed for the first time by a change in the law at the start of this year.Sources insisted that, although significant stumbling blocks remained, the GWR-Capital talks went much further than this. “The success of the past year in combination with the closing of the circulation gap with The Guardian has completely changed the commercial dynamics of the paper,” he said.The star feature in the group’s array of newspaper and media interests was South Africa, where operating profits rose 31 per cent to a record 101.7m rand (£8.7m).Mr Fallon said that although there were no immediate acquisitions planned, with debt now below €1bn and key ratios restored to former levels the company now again had the balance sheet strength for takeovers should the right opportunities occur.The interim dividend is being increased by 9.1 per cent to 3 cents.. Analysts said it showed the impact of the Working Time Directive.Nick Isles, the associate director of the Work Foundation, said that full employment had given workers much more bargaining power.

“It also shows the emphasis on a work-life balance is being taken seriously by employers.”. Independent News & Media, the international media company which owns The Independent and The Independent on Sunday, yesterday delivered its most buoyant set of figures in years. The figures were exceptional in that, for the first time, the company was able to report a rise in both profits and revenues in all five of its geographical areas.Sir Anthony O’Reilly, the chief executive, said the positive trading position had continued into the second half. The main factor behind this was a fall of about a million in those working more than 45 hours a week. Unemployment fell 16,000 to 1.41 million, pushing the rate to a record low of 4.7 per cent.Statistics also showthe average working week has fallen to a record low of 37.1, almost two hours below the peak of 38.9 in 1994.