Leading institutional investors in GCap want to see Britain’s largest commercial radio group enter takeover talks after Global Radio tabled an improved £371 million approach yesterday.

Standard Life Investments, which holds a 7.6 per cent stake in GCap, voiced its support for Global’s approach. David Cumming, head of UK equities at Standard Life Investments, said: “Due to the increased offer, we believe that it’s appropriate GCap engage with Global Radio with a view to accepting the revised bid terms.”

The comments followed what Global Radio described as its final offer to acquire GCap Media, owner of Capital 95.8 and Classic FM, after it sweetened its terms to 225p per share.

Schroders, which has a 16.1 per cent stake in GCap and supported GCap’s board when it rejected an earlier approach by Global, is also understood to be keen to see discussions between the groups.

Fidelity, which is the second-largest shareholder with 14.55 per cent, had not reached a decision last night as to whether it supported the approach.

Daily Mail and General Trust, which has a 14.3 per cent stake in GCap and a seat on GCap’s board, is likely to support the management. One source said last night that DMGT “would be a difficult shareholder for Global to persuade” and that, if there was an investor “willing to take the long-term approach”, it was DMGT.

Following talks between Global Radio and key GCap shareholders on Monday, Global, the owner of Heart 106.2, decided to make a revised approach before a put-up or shut-up deadline today. The latest proposal is the third approach that Global has made for GCap since December. The first and second, which were swiftly rejected by the GCap board, were for 190p and 202p.

Global said that it believed its most recent proposal offered “substantially greater value than could be achieved by GCap on a standalone basis”, even if the planned cost savings and initiatives outlined in GCap’s strategy announcement of February 11 could be achieved in full.

Global yesterday held final talks with GCap’s major shareholders to assess what price they would accept for the group.

Charles Allen, chairman of Global Radio and a former chief executive of ITV, and Ashley Tabor, Global’s chief executive, needed to gain investor support for a deal ahead of a Takeover Panel deadline tomorrow.

It is understood that Global Radio’s investors are divided about how much it should pay for GCap, with some concerned about overpaying.

GCap’s largest shareholders last week appeared to show their support for GCap’s management, which last month unveiled a new strategy for the group. Schroders even went on the record to voice its support.

Many of GCap’s leading shareholders are long-term investors that were stung by the £711 million merger of Capital Radio and GWR in 2005. The current market capitalisation of the group is £309.5 million.

Fru Hazlitt, GCap’s chief executive, believes her plans for the group will deliver more value to shareholders than an offer from Global Radio.

Global’s latest offer is subject to the completion of due diligence, an extension of the put-up or shut-up deadline to April 2 and the recommendation of the GCap board.

GCap yesterday issued a statement to acknowledge Global’s latest offer. “The board of GCap Media will consider this proposal and will make a further announcement in due course,” it said.

The news sent GCap’s shares up 11½p to 199¼p.

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