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Daily Mail offloads regional newspapers

by Laura Board In London  |  Published November 21, 2012 at 8:17 AM
The U.K.'s Daily Mail and General Trust plc Wednesday, Nov. 21, said it would cede control of its regional newspapers division, Northcliffe Media. In return it will receive £52.5 million ($83.6 million) in cash and a 38.7% stake in a new company housing both Northcliffe and another regional news publisher, Iliffe News & Media Ltd.

The agreement, which values the newly created Local World Ltd. at £100 million including debt, comes almost seven years after Daily Mail and General Trust abandoned an attempt to sell Northcliff after failing to garner bids around the £1 billion level it had sought. Since then Northcliffe has been cutting costs and fighting to reverse a slump in advertising revenue as consumers shun local papers in favor of digital media.

Co-owners in the new regional news company, Local World Ltd., include Trinity Mirror plc, which is investing £14.2 million for a 20% stake; Iliffe parent Yattendon Group, with a 21.3% stake; Artefact Group, an investment vehicle of Michael Ashcroft, a peer and former deputy chairman of the Conservative Party; and Odey Asset Management.

David Montgomery, former CEO of Trinity Mirror predecessor Mirror Group plc and the founder of struggling publisher Mecom plc , will serve as chairman of Local World, with Northcliffe CEO Steve Auckland and CFO Rachel Addison transferring over to those same roles.

Local World's titles will include 16 daily papers, 36 paid weekly titles, 40 free weekly papers as well as various niche products, magazines and local portal websites.

On a pro forma basis, Local World would have reported revenue of £273 million and operating profit of £21 million for the twelve months ended Sept. 30 , and would have had gross assets of £38 million at that date. It will employ more than 2,800.

As well as the influential Daily Mail tabloid, Dail Mail and General Trust's other businesses include Euromoney Institutional Investor plc and Risk Management Solutions, which produces data used by insurers.

In September, Daily Mail and General Trust sold conferences business Evanta to Leeds Equity Partners for about £58 million and shed its remaining 50% in DMG Radio Australia (DMGRA) to Lachlan Murdoch's Illyria Pty Ltd. for A$100 million ($103.5 million) in cash plus a deferred component equating to half the business' final dividend.

Daily Mail and General Trust's shares were little changed at 469 pence by late morning in London, giving the company a market value of £1.8 billion. Its adviser on the Northcliffe Media sale was Lazard.

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Tags: Artefact Group | Conservative Party | Dail Mail | Daily Mail and General Trust plc | David Montgomery | Euromoney Institutional Investor plc | Evanta | Iliffe News & Media Ltd. | Illyria Pty Ltd. | Lachlan Murdoch | Lazard | Leeds Equity Partners | Local World Ltd. | Michael Ashcroft | Mirror Group plc | Odey Asset Management | Rachel Addison | Risk Management Solutions | Steve Auckland | Trinity Mirror plc | Yattendon Group

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