Outlook: Now Mirror needs to fill Blank space

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The Independent Online
THERE WILL be rejoicing among many of his former editors, but are Mirror Group's largest three or four shareholders, led from the front by a City practitioner of the old guard, Sir Victor Blank, doing the right thing in driving David Montgomery out of the chief executive's seat?

That he will be going is not in doubt, even as, fighter to the end, he prepares to man the last of the barricades. The only question seems to concern the degree of dignity with which he is allowed to depart. About the best Mr Montgomery can now hope for is a stay of execution, to remain in place for the six-month mandatory Monopolies and Mergers Commission investigation that the group must go through if it is to merge with either of the two mooted bidders. But as seasoned City observers were saying last night, the recriminations are now so deep and bitter that compromise looks next to impossible.

How did it come to this? On one level this is about the Belfast boy made good, the former tabloid newspaper editor determined to rise to the top and finally getting his hands on a quite substantial publicly quoted company. From his Canary Wharf eyrie, he runs it as a feifdom and he naturally doesn't want to let go. With his Ulster roots to the fore, he refuses to compromise the management structure he has put in place. The sense of siege is heightened by a persistently hostile press. To keep fractious investors off his back, he brings in a City toff with more than 30 years of deal-making behind him to act as chairman.

Very quickly it becomes clear they don't get along. They are like chalk and cheese, the clubbable, smooth-talking Sir Victor, and the aloof, workaholic figure of Mr Montgomery. Finally matters are brought to a head by the termination of merger talks with Trinity, the regional newspaper group. Mr Montgomery admits that in part the breakdown was about who manages the combined group, but insists that primarily it was just that the offer wasn't good enough.

Sir Victor, for whom there was to be a continued role - as chairman, no less - goes ballistic, and backed by Phillips & Drew, Mirror's largest shareholder, accuses Mr Montgomery of putting his job before the interests of shareholder value.

Confusingly, Mr Montgomery then manages to vindicate his stance by attracting a rival and higher offer, from Regional Independent Media. But still Sir Victor wants him out. Trinity won't come back to the negotiating table unless Mr Montgomery goes, Sir Victor says through his emissaries. Throughout all this, needless to say, there has been only the most cursory of Stock Exchange announcements. Mirror's advisers and the Takeover Panel are tearing their hair out as the story gets spun and respun unattributably through the press.

It is more than possible to fault Mr Montgomery's management style, though the City can hardly complain about his consistent record of earnings and dividend growth. And undoubtedly he has made many enemies over the years. But unless Sir Victor knows something the rest of us don't, it is hard to see what Mr Montgomery has done wrong in this instance.

Sir Victor obviously thinks that Monty would get in the way of just about any deal, however good, that the RIM offer is just a ruse, and that Mr Montgomery is determined to defend his position and empire to the last, regardless of the cost to shareholders.

Well maybe, maybe not, but just how far are managements supposed to go in facilitating a bid? It is surely not realistic to expect executives to set light to themselves in order to allow someone else to step into their shoes. Furthermore, it is customary to pay a premium for management control. This, Trinity has so far shown very little inclination of doing. As for Sir Victor, his position is plainly riddled with at least as much conflict of interest as that of Mr Montgomery, and it might perhaps be appropriate if he too were made to throw himself on the pyre - all in the interests of shareholder value, you understand.

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