Rothermere family offers £3.1bn to take Daily Mail owner private

The Rothermere family has made an offer to take the publisher of the Daily Mail, i and Metro private in a £3.1bn deal, in a move that will end a 90-year run as a publicly listed company on the London Stock Exchange.

The family, which founded the Daily Mail in 1896 and listed parent company Daily Mail and General Trust in 1932, has tabled a 255p per share offer valuing the newspaper business at £850m including debt.

The Rothermere’s Jersey-registered holding company Rothermere Continuation Ltd (RCL) initially proposed a 251p offer in July for the 64% of DMGT it did not already control, provided a number of preconditions were met.

In August, DMGT completed the first of the preconditions, selling the insurance risk business RMS to the credit rating agency Moody’s for £1.4bn.

The second precondition was cleared when the online used car seller Cazoo made its $6bn stock market debut in New York. DMGT owns a 17% stake in Cazoo, worth about £1bn (£745m).

On Wednesday, DMGT said that shareholders will also receive a 568p a share special dividend, a 17.3p a share final dividend and 0.58 shares in Cazoo, worth a total of £2.28bn. Combined with the 255p a share offer, the overall deal to take DMGT private is £3.1bn.

The third precondition was reaching agreement with DMGT’s pension trustees which has resulted in a £412m payment into its three main schemes.

“The sale of RMS and the Cazoo initial public offering have delivered excellent shareholder returns, but inevitably DMGT is now a considerably smaller group of businesses, with significantly greater exposure to consumer media,” said Jonathan Harmsworth, the fourth Viscount Rothermere, who is the chair of DMGT.

Majedie Asset Management, one of DMGT’s largest shareholders controlling 4.6% of the company’s class A shares, said that the business is worth at least twice the price offered.

“The offer for the residual businesses is substantially below what we believe is a fair and reasonable valuation,” said Chris Field, fund manager at MAM. “Our appraised valuation estimate of only the largest businesses within DMGT materially exceeds double the current offer price of 255p. We strongly urge shareholders not to accept the offer.”

Lord Rothermere’s RCL holds all of the vote-bearing shares in DMGT’s two-tier stock structure, which means that the deal is not at risk of being blocked when the deal is put to a shareholder vote.

“We believe the terms of our offer to be fair, particularly bearing in mind not only the existing level of debt within DMGT at a time of increasingly difficult market conditions, but also the restrictions imposed on the operation of the business as part of the settlement with the pension trustees,” said Rothermere.

DMGT was founded by Harold Sidney Harmsworth, the first Viscount Rothermere, in 1922. He set up the Daily Mail with his brother Alfred in 1896, and subsequently launched the Daily Mirror.

Harmsworth, 53, Harold’s great-grandson, has led the business through huge technological change as print newspapers have had to refocus their business models in the digital age. MailOnline, launched in 2003, has grown to be one of the world’s most popular English language news sites.

The publisher of the Daily Mail has been reorganising the business through disposals and targeted acquisitions of its own in recent years, having bought the New Scientist magazine in a £70m deal in March, as well as the i newspaper in a £49.6m deal two years ago.

The company has made £1.2bn from disposals in recent years of its stake in the property portal Zoopla, the education business Hobsons and the energy data firm Genscape.

When DMGT is taken private it will leave Reach – the parent company of the Mirror, Express and Star national titles, and regional publications such as the Manchester Evening News – as the only major UK newspaper group remaining as a publicly listed company on the London Stock Exchange.

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