Company of the Week: Mirror Group

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The Independent Online
MIRROR Group, publisher of the Daily Mirror, said chief executive David Montgomery resigned, setting the stage for a struggle over control of the UK's third-largest newspaper group.

Trinity, the regional newspaper publisher which broke off earlier merger talks with Mirror, and Regional Independent Media, a regional publisher whose bid price Mirror rejected, are expected to renew their offers. John Allwood, 47, director of the company's regional and Scottish divisions and former Mirror finance director, replaces Mr Montgomery as chief executive.

Key Mirror investors, including Phillips & Drew Fund Management, which owns almost 22 per cent, hold Mr Montgomery responsible for the recent collapse of an all-stock merger plan between Mirror and Trinity. P&D insists a merger with Trinity would be best for investors and Mirror. "I think shareholders will benefit from this situation even if I don't think the price will rise above 220p," said Laura Larghi, an analyst with Paribas. "Now it will become clear if Trinity's problem was Montgomery or something else. We'll also see if RIM raises their bid."

Mirror Group shares rose 6 per cent to 210p. It has already rejected a pounds 913m bid led by RIM as inadequate but said talks would continue to explore whether the offer can be raised. RIM declined to say if it would consider raising its price should Trinity or others bid for Mirror.

Trinity broke off talks to acquire Mirror on 10 January. The company, which publishes the Liverpool Echo, wouldn't say if it will counter the RIM offer. "We continue to watch how Mirror shareholders are reacting to this news,"it said.

Some analysts saw an increased bid by Trinity as likely. "I could see a Trinity stock bid of 180p per share for Mirror," said Ms Larghi.

Other companies are reported to be interested in Mirror, including Hearst Corp, in conjunction with private venture group Compass Partners.