Mirror deal nears after Montgomery’s ousting

Mirror Group looks likely to have a new owner - probably a regional newspaper publisher - by the middle of this year following the ousting of its chief executive, David Montgomery, on Tuesday.

Mirror Group looks likely to have a new owner - probably a regional

newspaper publisher - by the middle of this year following the ousting

of its chief executive, David Montgomery, on Tuesday.

Montgomery’s resignation ended the battle between Mirror Group’s top

management and its shareholders, opening the way for a bidding war

between two newspaper groups, Trinity and Regional Independent


It is expected that Trinity - whose talks with Mirror Group collapsed

three weeks ago - will re-enter negotiations. Trinity, which made it

clear that Montgomery was a major obstacle to a deal, had made a

share-swap offer worth 160p a share. RIM’s offer, which has been

rejected, is in cash and values the company at pounds 913 million or

200p a share. It would also take on pounds 500 million of debt.

A Trinity spokesman said this week: ’We think Mirror Group’s

shareholders will be looking to choose between a quoted investment in a

strong well-financed media group, such as the Mirror-Trinity

combination, while getting the benefits of any synergies that would

arise from such a prospect, against being cashed out by a financial

buyer in the short term.’

While Trinity has said that all interested parties in Mirror Group would

’benefit from a little time while the dust settles’, City sources expect

talks to resume quickly.

Meanwhile RIM, backed by the private equity firm, Candover, is

continuing talks with Mirror Group. It is waiting for more detailed

financial information and could make a higher offer next week.

Montgomery, who in his resignation statement said it was ’an opportune

time to make this decision as the group now seems less likely to have an

independent future’, walked away with a pounds 1.35 million pay-off.

John Allwood, Mirror Group’s regional and Scottish director, and its

former finance director, has replaced him.

Montgomery’s departure followed a series of meetings between Mirror

Group’s executive and non-executive directors. Over the past few weeks,

the division between Montgomery, the Mirror Group chairman, Sir Victor

Blank, and the group’s largest shareholder, Phillips & Drew, over the

future of the company developed into a public feud, fuelling concern

that the media company’s image would be damaged. One media agency head

said: ’It’s another example of people washing their laundry in public.

Mirror Group does seem to be plagued with these very public


Both Trinity and RIM would fit well with Mirror Group’s existing


Paul Richards, a media analyst at Panmure Gordon, said: ’Trinity is

extremely appealing but if RIM can make a knockout bid with a cash

offer, some shareholders may prefer that.’

He added: ’Fund managers sometimes prefer cash bids because they can see

an instant return on investment. Alternatively, Phillips & Drew has

indicated that Mirror Group’s assets merged with Trinity’s would lead to

a significant re-rating by the stock market.’

Analysts say a merger is unlikely to be in place before June. It could

take a month before Mirror Group shareholders resolve whether they

should become part of a sell-out cash bid or a merged group, and an

investigation by the Monopolies and Mergers Commission could take

another three months.

The future of Mirror Group’s yet-to-be launched daily title, Sporting

Life, hangs in the balance. And, according to Richards, the future of

Live TV looks bleak. ’We will see a radical overhaul of the company

structure if it merges with Trinity or RIM. I wouldn’t be surprised to

see scaling back, starting with Live TV,’ he said.

If Trinity merges with Mirror Group, it is unclear how Trinity’s

regional sales house, Amra, will operate. Neil Hepburn, regional media

director at BMP OMD, said: ’I don’t see any other option than Mirror

Group’s regional titles moving into Amra.’

Jo Stead, the head of regional media at New PHD, added: ’If RIM or

Trinity merged with Mirror Group, it would be a very neat marketing


Hepburn echoed Stead’s view that a more diverse regional sales package

would be created for media buyers, but was concerned about Trinity’s

potential conflict with Mirror Group titles in Scotland. ’There is an

overlap with the Daily Record in Scotland and it might get sticky with

the MMC in central Scotland,’ he said.


October 1992: Brought in to revive the company’s fortunes


March 1994: Acquires stake in The Independent

September 1994: Takes 15 per cent stake in STV, later increased to 20

per cent

1995: Launches Live TV

January 1997: Puts pounds 16m into The Mirror’s relaunch

1997: Acquires Midland Independent Newspapers for pounds 297 million

December 1997: Buys Racing Post

January 1998: Sells The Mirror’s 46 per cent stake in The Independent to

Tony O’Reilly’s Independent Newspapers

June 1998: Closes Sporting Life

July 1998: Talks with Trinity break down as the German media group, Axel

Springer, emerges as an interested buyer. The discussions with Springer

end January 1999 Trinity re-opens talks and RIM then counters Trinity’s

offer. Montgomery turns down both offers and resigns shortly




Market share: Number one in the regional newspaper market with 12.7 per

cent share of the weekly market

Key titles: Trinity owns 121 titles, including Belfast Telegraph,

Liverpool Echo, Chester Chronicle and Newcastle’s Sunday Sun

Other media: Has a 20 per cent stake in Independent Radio Group; 13

specialised advertising magazines, including Micro Computer Mart,

Classic Car Mart, PC Mart and Computer Trade Only. Publishes regional

papers in the US through its Pennsylvania-based subsidiary, Gateway

Press, Buckeye Publishing in Ohio and East Central Communications in



Market share: Sixth-largest player, with a 5.6 per cent share of the

weekly newspaper market, according to NS Marketing

Key titles: Yorkshire Post, Sheffield Star, Yorkshire Evening Post, West

Lancashire Evening Gazette.

Other media: 40 magazines including Yorkshire Business and The Northern



The US magazine publishing company, Hearst Corporation, with backing

from the venture capital group, Compass Partners.The Barclay brothers,

who own the Scotsman and Sunday Business. The German publisher, Axel

Springer, could rekindle its interest.


Newspapers: The Mirror, The Daily Record, The Racing Post, Sunday

Mirror, Sunday People, Sunday Mail

Regional newspapers: Fourth-largest player in the regional newspaper

market, according to NS Marketing, with ownership of 44 titles that

include Birmingham Evening Mail, Birmingham Post, Sunday Mercury,

Coventry Evening Telegraph, Derry Journal and Belfast News Letter

Other: Owns 34 specialist and trade magazines alongside ten regular


Television: Owns Live TV, City TV. Has 20 per cent stake in STV.


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