Springer set to move in on Mirror Group

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The Independent Online
THE MIRROR Group expects "a proposal" this week from Axel Springer Verlag, owner of Bild Zeitung, Germany's largest circulation tabloid, according to an executive familiar with talks between the two companies.

The City is also anticipating a bid from Berlin for the publisher of The Mirror, Sunday Mirror, and a raft of regional papers. Mirror Group shares closed at 248.5p on Friday, 1p up despite the fact that nothing has happened since the news broke a week ago that both Springer and Trinity, the Chester-based regional news group that owns the Liverpool Daily Post and Echo, had been in talks with the company.

"We've had the early exchanges," said Derek Terrington, media analyst at Teather & Greenwood. "People have withdrawn to their camps to think about things. Springer has said it will publish a definitive statement about its international strategy in June. We'll see."

Among the heaviest buyers of Mirror Group shares has been Chicago-based Brinson Partners, a unit of the recently merged Swiss Bank Corp and Union Bank of Switzerland. The UBS UK fund management arm, PDFM, owns 23 per cent of the Mirror Group. SBC Warburg is acting as Mirror Group's adviser.

Carl Gargula, a Brinson partner, declined to say why his firm was buying Mirror Group shares. But a London market maker said on Thursday that the Chicago fund management group had built up a 4 per cent stake in the company. Its management is expected to meet with Mirror Group soon.

Twelve days ago, Springer acknowledged that it was interested in bidding for Mirror Group after initially denying reports. Last week, Mirror Group said it had held talks with Trinity, but was putting those talks on hold pending "clarification" of Springer's intentions.

The speculation is that the Mirror Group is looking for a bid price of about 300p, which would value it substantially above its current market capitalisation of pounds 1bn-plus. Earlier this year, its shares dipped to 185p after City sentiment turned against the group on the grounds that its cost-cutting chief executive, David Montgomery, had made all cuts possible and lacked the vision to move the company forward.

Martin Clarke, PDFM executive, said: "We bought our shares at pounds 1. We were happy while they climbed. We were less happy last year."

Contact between Springer and the Mirror Group is being handled by Mr Montgomery and Springer chief executive August (Gus) Fischer, a former executive in News Corp.