THE media group Emap is to offer “B” shares to investors as a tax-efficient way of distributing the proceeds of a break-up of the £1.79 billion company.

Investors in the company will be given an option of taking either the B shares or cash. The shares option would allow them to roll over any capital gains into the next tax year.

The auction for Emap’s three businesses – consumer magazines, business-to-business publishing and radio – will start in two weeks. Four documents, one for each operation and one for the group’s accounts, will be sent to potential bidders.

Alun Cathcart, Emap’s chairman, does not want the auction to be dragged out. He is confident that buyers can be found for all three divisions but he has reserved the right to abandon the break-up.

Sources close to the chairman say he does not want prolonged uncertainty and he has set a new-year deadline for deals to be done.

The sale of Emap’s radio business has been helped by new audience figures for two of its London stations. Kiss FM inched into fourth place and Emap’s Magic 105.4 tied for first place with Heart as the capital’s most listened-to station.

Cathcart has also been able to reduce the group’s debt to £250m following the sale of its Irish radio and French business. The remaining debt is now held in a bond with a coupon of 6.25% that can be repaid at par.

Emap is also confident the proceeds of a break-up will be tax-free, as the group is sitting on some large tax losses that have yet to be utilised.

Analysts believe the business-to-business arm is worth about £1.3 billion, consumer magazines around £750m and radio in the region of £400m.

Apax has registered its interest for the business-to-business arm as have several private-equity and trade buyers.

Mondadori, the Italian publisher, is said to be interested in the consumer magazine division.

It is still possible that if two subsidiaries are sold, Emap could choose to keep one and remain as a quoted company. However, Cathcart has no appetite to take an executive role should this route be taken.

Since chief executive Tom Maloney left, Cathcart has temporarily taken operational control of the company.

Helping him with the auction is finance director Ian Griffiths.

David Rough, one of the group’s nonexecutives and chairman of the remuneration committee, is studying a proposal to pay a special bonus to Emap’s executive team for leading the break-up.

Analysts believe the break-up should produce profits in excess of 20% of the group’s market value. Emap's share price closed at 829p on Friday.

Since Cathcart came to the company a year ago, he and Griffiths have looked hard at the merits of a break-up. Until recently they have felt that the proceeds were not sufficiently attractive.

It is thought several of the divisional managing directors could join forces with private-equity bidders. Cathcart has spent the past week visiting his top executives in an attempt to put a stop to any further uncertainty surrounding the sale.

Elsewhere in the media industry, Scottish Media Group is this week due to unveil the board of Virgin Radio.

This board will become effective only if the radio business is demerged into a separate listed vehicle.

Analysts now believe this route is more likely than a sale.

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