Deal values Northcliffe Media at around £100m
Yattendon has reportedly partnered with ex-Trinity chief David Montgomery
New company would have revenues of more than £200m
Trinity Mirror confirms it is in discussions towards taking a minority interest in new company
The parent company of regional newspaper company Iliffe News and Media is part of a joint venture in talks to buy Northcliffe Media in a move that would see the two publishers merged, according to reports.
Details over the takeover come two weeks after Press Gazette reported that Northcliffe owner Daily Mail and General Trust had held talks with a number of interested parties in recent months and would not rule out an imminent sale of the company.
According to the Financial Times (£), Iliffe parent company Yattendon has partnered with former Trinity Mirror chief executive David Montgomery in a deal valuing Northcliffe at around £100m
If it goes ahead then it would create a new company called Local World with revenues of more than £200m.
The deal is understood to be supported by asset manager Crispin Odey and would see Montgomery take a “small stake” in the new company , which will receive financial backing from HSBC, Lloyds and the Bank of Ireland.
Iliffe News & Media publishes three evening newspapers, including the Cambridge News, along with eight for weekly newspapers, 18 free newspapers, two Sunday free newspapers, one quarterly and four monthly glossy magazines.
Northcliffe publishes of 84 regional newspapers across the UK including the Leicester Mercury and South Wales Evening Post.
Trinity Mirror has confirmed its involvement in the joint venture. It said in a statement: "Trinity Mirror plc can confirm it is in discussions towards taking a minority interest in a new company comprising the assets of Northcliffe Media, a division of DMGT plc and Iliffe News & Media, a division of Yattendon Group plc. No offer has been made and there is nothing further to report at this stage."
According to the FT, under the terms of the proposed deal “Yattendon would take equity in the new company in exchange for all its newspapers and DMGT would maintain a minority stake as well as receiving some money upfront”.
Sky News city editor Mark Kleinman reports that Montgomery is “likely to use the initial deal to pursue further mergers, potentially with Johnston or Trinity, according to insiders”.
A spokeswoman for Yattendon said: "I can confirm that Yattendon Group has held preliminary discussions with David Montgomery about becoming founder shareholders in a new local media company.
"We have a shared vision about the long term opportunities for local media but at this stage there is no certainty whether these discussions will lead to a satisfactory conclusion."
A spokesman for DMGT said: "In response to media speculation, DMGT confirms that it is currently in talks regarding the future of Northcliffe Media.
"No deal or transaction has been agreed, but if these talks move to the point where agreement is reached, an announcement will be made to the market."
In February 2011, DMGT finance Peter Williams director opened the door to offers for Northcliffe when he said that consolidation was needed in the regional press but that “we are not going to be the consolidator."
In June, managing director Auckland told staff he could rule out the business being sold by parent company Daily Mail General Trust.
Auckland told staff earlier this year: “I cannot say that we will or will not be sold in the near future. We are working in an uncertain market and our job is to maximise every opportunity.
“We need to ensure teams are focused on delivering results that are better than we ever thought imaginable."
He added: “If we are sold, it will mainly affect the head office team. If you are a good operator in your centre, you are unlikely to be affected.”
In November 2011, the DMGT reportedly appointed Ernst & Young to value Northcliffe ahead of a potential sale, and earlier that year DMGT chief executive Martin Morgan told reporters the group had no plans to inject fresh capital into Northcliffe and that it was open to any “worthwhile approaches”.
In 2006, DMGT abandoned a proposed sell-off of Northcliffe after it failed to achieve an asking price of around £1.5bn. Today the group is thought to be valued at less than one tenth that figure.
Since last summer four of the company’s newspapers, including Exeter’s Express & Echo and the Herald Express in Torquay, have switched from daily papers to weeklies, helping Northcliffe return to operating profit growth for the first time since the recession struck (up 34 per cent to £11m, according to the latest figures).