Outlook: Mirror Group

SO MAYBE David Montgomery was right after all. The Ulsterman was forced to step down as chief executive of Mirror Group in January because he was supposedly blocking a merger between Mirror and Trinity, the regional newspaper publisher. Yesterday, the Mirror board, minus Mr Montgomery, rejected an increased offer from Trinity as inadequate. Even Phillips & Drew, the 23 per cent shareholder which was previously so in favour of a Mirror-Trinity combination, said the offer was too low.

What has changed? A cynical conclusion would be that Sir Victor Blank, Mirror's chairman, has cooled on the prospect of a deal with Trinity now that he is no longer being promised the role of chairman in the combined group. Like Mr Montgomery, he has come to believe that Trinity should be forced to pay a premium for management control.

There's more to it than that, however. Regional Independent Media, backed by deep-pocketed venture capitalists, has already offered 200p in cash for each Mirror share, and is considering upping its bid. Even after yesterday's share price jump, Trinity's cash-and-shares offer is only worth 213p per Mirror share - well short of the 220p-230p that analysts think the company is worth.

Ultimately these are all just skirmishes in what remains a phoney war. The fact is that, until the Monopolies and Mergers Commission has cleared both potential bidders, neither is in a position to launch a firm offer. Given that the MMC investigation will take at least three months, any discussion of value in the meantime is largely futile.

RIM is likely to register its interest in Mirror with the Department of Trade and Industry this week, triggering the MMC enquiry. The Mirror board needs Trinity to throw its hat in the ring as well, so that there are still two bidders around to force up the price in three months' time. At the end of all this, Mirror shareholders won't tolerate being left empty-handed.