Al Fayed pulls out of talks over sale of £60m People

Fayed wanted Kelvin MacKenzie as People editor

Harrods boss Mohamed Al Fayed has pulled out of negotiations to buy the Sunday People because the £60m price tag was too high and the man he wanted to run the newspaper, Kelvin MacKenzie, turned him down.

Although Trinity Mirror may have been willing to consider an offer of £55m, its insistence on hanging on to the print and distribution contracts, as well as the lease deal on the two floors of Canary Wharf the paper occupies, proved to be the sticking point.

Al Fayed, who is keen to become a newspaper proprietor, thought Trinity Mirror bosses were simply being too greedy and that the People was not worth anything like the asking price.

Talks have been going on since before Christmas after the newspaper group let potential buyers know that, although the People is not officially for sale, they are open to offers. If the company does not get the price it wants, it intends to hang on to the paper, even though it is competing directly with stablemate the Sunday Mirror.

Al Fayed’s interest resulted in two meetings with Trinity Mirror executives. No formal offer was ever made, however, nor did they get as far as signing the obligatory confidentiality agreement that is a precursor to formal negotiations.

Sources say Al Fayed considered 0ffering between £10m and £15m for the People and was prepared to make his own printing and distribution arrangements. But a key issue was who would run his fledgling newspaper empire. Al Fayed wanted MacKenzie to do it but the former Sun editor was not interested, which finally convinced him to pull out.

Al Fayed declined to comment on the negotiations but a spokesman said: "We have decided it would be more diplomatic to say nothing." Trinity Mirror confirmed yesterday that four potential buyers had been in touch. A spokesman said: "The Sunday People is a valuable and valued part of our portfolio and makes a significant contribution to our cost base. It is not for sale. Like all owners of trophy assets, we occasionally receive unsolicited offers to buy them. As responsible custodians of a public company we have a duty to consider any realistic offer for our assets.

"Following recent inaccurate speculation about the Sunday People, we have, unsurprisingly, received a number of unsolicited offers. Some realistic, some not. None has moved from the preliminary stage."

Express Newspapers proprietor Richard Desmond is also believed to be interested and sees the Sunday People as a natural partner for his Daily Star. But he too is scornful of the price tag and is unlikely to put in an offer unless it is reduced.

Trinity Mirror has been carrying out a wide-ranging internal review with a view to repositioning its titles. Under consideration is the dropping of The Mirror’s red masthead to put it firmly into the mid-market.

The Sunday People has seen a 7.75 per cent drop in circulation year-on-year and is now selling 1,389,778. The Sunday Mirror’s latest ABC figure was 1,845,860. Their combined circulations are still 850,083 behind the News of the World.

by Philippa Kennedy

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