Pearson to sell off Westminster Press
Wednesday 26 June 1996
Analysts said last night the chain of 60 newspapers, including the Northern Echo, the Brighton Evening Argus and the Oxford Mail, could fetch up to pounds 300m.
Lazard Freres, Pearson's merchant banking arm, is to consider offers from a limited number of qualified companies, a spokesman said last night.
The most likely buyers are Newsquest, owner of the regional titles formerly held by Reed Elsevier, and Northcliffe, the regional press subsidiary of Daily Mail & General Trust.
Other possible buyers include Midland, publisher of the Birmingham Post, and Tony O'Reilly's Independent Newspapers. But lower-than-expected profits this year could make it difficult for Midland to raise the required funds, analysts said.
Newsquest, backed by US leveraged buyout specialists KKR, could buy the group and then break it up, keeping only the titles it wants and selling newspapers on to other buyers, including Midland.
Explaining the decision to sell, John Makinson, finance director, said: "When we looked around the group, trying to decide which links with other Pearson assets made sense, Westminster Press did not really fit."
The company, which publishes the Financial Times and owns Madame Tussauds in London, has been under intense pressure in recent months to restructure its sprawling operations, and to sell investments in mature industries. The market has speculated that lack of action could spark a takeover bid aimed at breaking up the publishing, theme park, media and financial services conglomerate.
A senior source at Pearson conceded that the market had been impatient with the company, and added: "I doubt just selling Westminister Press is going to make everyone sit up and applaud."
Mr Makinson said the move was not "an answer to the company's critics," but added that further action - including disposals - could not be ruled out. "I think you'll find in three years time that we will be a very different company," he said, suggesting that the US market remained a key interest.
Pearson's US CD-Rom subsidiary, Mindscape, turned in a miserable performance last year, and has stoked criticism of management, especially managing director Frank Barlow.
Westminster Press, which was run by Mr Barlow before he moved up to the Pearson board, has some of the regional market's best operating margins, following a cost-cutting campaign last year. It made operating profits of pounds 22m last year, on revenues of pounds 143m. But analysts suggested the margins could be difficult to maintain without new investment, and pointed to declining readership figures in excess of the industry-wide average.
Westminster Press has lost circulation at an average compound annual rate of about 5 per cent over five years
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