Outlook: Monty throws his bowler in the ring
Wednesday 21 July 1999
The statement, apparently demanded of him by the Takeover Panel, was somewhat short on detail and at this stage it is hard to judge the credibility of his plans. Presumably they cannot be completely frivolous, or the Panel wouldn't have stepped in, and if it is true that KKR, flush with cash after the recent disposal of Newsquest, is ready to back him, then he may be in with a better chance than the City generally gives him credit for.
But it won't be easy. Public to private transactions are notoriously hard to achieve even with quite small companies; in Mirror's case, Mr Montgomery would need to muster pounds 1.3bn or more.
The Montgomery proposals also run up against a problem common to all attempts to take public companies private. If venture capitalists can see substantial upside in such acquisitions, then perhaps existing shareholders should attempt to realise it for themselves. Put another way, if KKR is prepared to pay pounds 1.3bn for Mirror Group, then the company must be worth a lot more.
On top of all this, Mr Montgomery faces the prospect of at least two competing bids - one of them from Trinity, which has quite highly valued paper to trade with. Meanwhile, Mirror Group seems to be perfectly happy without either Mr Montgomery or Trinity and John Allwood, the recently installed chief executive, is probably right to insist Mirror Group can go it alone. Certainly big City shareholders, including Phillips and Drew, are going to be reluctant to accept anything less than pounds 3 a share.
City gossip has it that a deal has already been stitched together with Trinity; final consummation merely awaits the now overdue go ahead from Stephen Byers, the Trade and Industry Secretary. Any such combination would necessitate the disposal of titles in Northern Ireland, where Mirror and Trinity together would dominate newspaper ownership. In the end, Mr Montgomery may therefore have to settle for the consolation prize of the Belfast Newsletter.
But it would be unwise to paint him out of the big picture quite yet. Trinity has no experience of running national newspapers, and the Mirror management will not like working with upstart regional masters. The game has still a while to play.
Diving in at the deep end is no excuse for shirking the style stakes
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