John Makinson, the Pearson executive overseeing the sale, and Lazard Brothers, which is running the auction for the collection of 60 regional newspaper titles, are reliably believed to be canvassing both trade and financial buyers, hoping to create a consortium able to bid more than pounds 300m for the titles.
Attention has focused on United News & Media, Trinity and Northcliffe, the regional newspaper arm of Daily Mail & General Trust. The latter two of these are believed to have already made bids for part of the group. Lazard also hopes to entice a financial buyer to join a consortium.
However, United has thus far resisted Lazard's approaches, insiders said last night, and will only look at the option seriously when Lord Hollick, its chief executive, returns from holiday. One source said last night that United remained interested in buying Blenheim, the exhibitions company, but that those talks had been "put on the back burner".
Media analysts predicted last night that United would stay away from the Westminister Press auction. "Hollick has said he is interested in exhibitions, business magazines, television and financial data services," one said. "There isn't really room on that list for more regional newspapers."
The two main bids on the table for Westminster Press, which sources close to the talks say are similar, value the titles at less than pounds 300m, although the headline figure is difficult to establish because of the structure of the offers.
The bidders are believed to be concerned that the titles, which are on track to make pounds 35m this year, could be far less profitable in the future unless significant capital investment is made. There is also a difference of opinion over the value of the company's stake in the Press Association and its pension plan.
"The regional newspaper market will require considerable capital to take advantage of opportunities in the electronic age," one analyst said. "Nobody will want to overpay for regional newspapers right now."
He added that a series of newspaper deals may have sated the market's appetite, and that Pearson may have waited too long before announcing the sale.
Any deal that gives Pearson significantly less than pounds 350m would be highly dilutive, media analysts said last night. Fears that the auction was not proceeding smoothly, coupled with expectations of poor profits when the interim results are announced next week, sent Pearson shares down 24p yesterday to 606p.
Mirror Group and Independent Newspapers each own 46 per cent of the Independent.
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