Mirror seeks investor backing for pounds 110m sale

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The Independent Online
THE Mirror Group has sent a letter to its shareholders asking for their approval to sell its 19 per cent stake in Scottish Media Group in a bid to thwart a lengthy investigation of the sale by the Takeover Panel.

Trinity, one of the companies that wants to buy the Mirror Group, last week lodged a complaint over the issue with the Takeover Panel claiming the sale of the stake, worth around pounds 110m, should first be put to a shareholders meeting.

Under Takeover Panel rules, a take-over target can not sell anything that is 15 per cent or more of net assets during a Monopolies and Mergers reference without the approval of its shareholders.

The Mirror says it already has the support of 40 per cent of its shareholder base to sell Scottish Media, and now wants the thumbs up from the rest. Those shareholders to have already supported the Mirror's plans include Phillips & Drew Fund Management and Hermes and Prudential. "It's our business and we are entitled to run it as we wish" said a Mirror Group spokesman.

Mirror Group Chief Executive John Allwood wants to sell the stake and a property in Holborn to reduce the company's debt ahead of a possible sale.

The other company bidding for the Mirror is Regional Independent Media. RIM's 200 pence per share all-cash bid is being backed by venture capitalists. Mirror Group has said it will only sell the Scottish Media stake if it can get at least pounds 9 per share, which would put a price tag of around pounds 108m on Scottish Media, owner of the Scottish Television and Grampian ITV franchises and the Glasgow Herald newspaper .

The Mirror Group sees Scottish Media as a non-core asset because media cross-ownership rules restrict it from going into the television business in a big way.

Analysts believe Trinity went to the Takeover Panel because it doesn't want the Mirror to reduce its debt, worth pounds 489m, because that would make it easier for RIM to get more venture capital and so increase its offer for the Mirror Group.