Global Radio has begun talks with GCap shareholders to try to win their support for a takeover of Britain’s largest commercial radio group after Global’s initial approach was rejected privately by the board.

It is understood that advisers at UBS, who are acting for Global alongside KC Capital, started to make contact with GCap shareholders yesterday to assess their views on last month’s approach.

Global wants to gauge the reaction from institutional shareholders to the 190p-a-share cash offer, as it considers its next step.

GCap, the owner of Capital Radio, confirmed yesterday that it had received a takeover approach from Global, sending its shares up 55p, or 45.45 per cent, to 176p, the biggest gain since the company was formed three years ago through the merger of Capital Radio and GWR.

The board was under pressure last night to explain why it had rejected the proposal, which valued the company at a 50 per cent premium, without first consulting its shareholders.

Fru Hazlitt, the new chief executive of GCap, said that she would explain the board’s decision when she meets institutional shareholders, including Fidelity and Schroders, who each own about 15 per cent, to outline her new strategy in early February.

Asked if she intended to bring forward her strategy announcement in light of the takeover approach, Ms Hazlitt said that she would not do so. One source said that Ms Hazlitt was determined not to be pushed into releasing something that was “half-baked”.

GCap’s board said that it had turned down Global’s approach because it significantly undervalued the company. The board is understood to have been unwilling to enter discussions with Global on the basis that 190p was only a 1.5 per cent premium to GCap’s share price six months ago, despite being a premium of more than 50 per cent to the radio group’s share price in recent weeks.

While GCap refused to be drawn on its desired price, one source said that the price would have to “start with a ‘2’, and if they raised it by 10 per cent it would still likely be too low to initiate discussions”.

Global Radio, which owns the radio stations Heart 106.2, Galaxy and LBC and is chaired by Charles Allen, the former ITV chief executive, said at the weekend that it was “currently considering its position”.

It is understood that the group wants to become a dominant force in British radio and, after losing out to H Bauer in the auction for the radio assets of Emap, is left with little choice but to bid for GCap if it wants to achieve its ambition.

Another source said that Global was keen to let shareholders drive the situation forward. Although it is unlikely to table a higher offer as early as this week, it has not walked away and will consider a fresh bid in the near future. The source said that, after putting an offer of more than 50 per cent premium on the table, Global was surprised that it was rejected so rapidly. Shareholders accounting for more than 15 per cent of the company reiterated yesterday that they were angered that they had not been approached about the Global offer. However, Richard Eyre, GCap’s chairman, said that he was “encouraged” after conversations with the group’s institutional shareholders.

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