Charles Allen’s Global Radio has come under pressure from key shareholders in GCap Media to increase its offer for the owner of Classic FM and Capital 95.8.

Leading investors in Britain’s largest commercial radio group told The Times that Global’s proposed offer of 190p a share, which was rejected by the board in December, was too low. Global Radio, which has been given until March 5 by the Takeover Panel to decide whether it will make a formal offer for GCap, has met GCap’s institutional shareholders in the past week. Key institutional shareholders, who refused to be named, said that they wanted a revised approach from Global to start with “at least a ‘two’”.

Global’s meetings with institutions came after a strategy announcement for GCap by Fru Hazlitt, GCap’s chief executive, also known as her “defence document”, on February 11.

GCap’s management also met its shareholders from February 12 in an attempt to convince them that its strategy for the group would generate more value than a takeover by Global Radio. Leading institutions understood to have met both radio groups include Fidelity and Schroders, each of which has a stake of about 15 per cent.

Despite Global’s original approach being a premium of more than 50 per cent on GCap’s share price in mid-December, the offer was rejected on the ground that it significantly undervalued the company.

GCap sources argued at the time that its shares were at the 190p level six months before the approach was made and would return to that level soon with the help of new management. Ashley Tabor, chief executive of Global Radio, shrugged off market talk last week that Global needed a deal after losing out to Bauer in the battle for Emap’s radio assets, which include Magic and Kiss. “If it doesn’t happen, it doesn’t happen. We’re in no rush,” Mr Tabor said.

Last June Mr Tabor’s Global Radio agreed to acquire Chrysalis, the Heart 106.2 owner, for £170 million.

Ms Hazlitt said in her strategy announcement last week that there was no future for digital audio broadcasting (DAB) technology and announced plans to abandon many of its digital radio investments.

She said that the group’s 63 per cent stake in Digital One, the national radio multiplex, would be sold to Arqiva and that the digital radio stations Planet Rock and theJazz would be closed.

GCap has come under increasing pressure in recent times from difficult advertising conditions, with advertisers choosing the internet over traditional media, fierce competition in the London market and competition from the BBC.

It is widely thought that a consolidated commercial radio industry would be beneficial because it would create a stronger force to compete with BBC and an improved, one-stop shop for advertisers.

GCap’s shares have remained at roughly the 190p level since the approach from Global Radio was confirmed. The shares closed down ¼p at 191½p yesterday.

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