Lorna Tilbian, media analyst at Numis Securities, is not overly concerned by regulatory hurdles. In a desk note, the Numis media team said: "In terms of timing, we expect the formal announcement of a deal to take place next week.
"Completion could take place by summer of 2003, depending on the length of the regulatory process. Given that the Competition Commission has already investigated ITV thoroughly through the proposed Carlton/United merger, this process should not be too drawn out."
Regarding cost savings at the company, Numis is predicting that the group could strip out £50m from combining the businesses completely. However, this figure could be lowered to £30m if, as advertisers are hoping, ITV maintains two independent sales houses.
If cost savings of £30m are generated, the operating profit could improve by as much as 12%. Numis said that Carlton and Granada shares remain a "buy", with target prices of 179p and 99p respectively.
In the longer term, a unified ITV would be a more attractive target for bids by an international media group.
Shares in both companies surged on the news, before dropping back mid-morning. At lunchtime, Carlton was up by 6.2%, or 7p, at 120p, while Granada was up by 6.4% to 70.75p.
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