Trinity tipped to buy United papers

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The Independent Online
Trinity International, the regional newspaper group, is poised to seize control of United News & Media's regional newspapers.

The auction of the titles, carried out by investment bank Dresdner Kleinwort Benson, will close this week, with the deadline for bids on Thursday.

Suggestions this weekend were that Trinity was in a strong position to win the bidding war for control of the northern division of United Provincial Newspapers.

The northern titles, including the flagship Yorkshire Post, generate annual sales of about pounds 140m. The price paid for the division is expected to be at least twice that sum. The southern arm, which consists of 30 advertising-based titles in London, seems set to be sold to Tony O'Reilly's Irish group, Independent Newspapers. It made the highest offer in the initial round of bids. Sales of that business are substantially less, at approximately pounds 25m.

There is also a small rump, in the form of a Spanish arm, which publishes Segunda Mano, Spain's equivalent of Exchange & Mart. That unit could fetch over pounds 30m, either from a Spanish publisher or a financial investor.

In total, United is expected to raise over pounds 360m, and if the units fetch two-and- a-half times sales - the multiple that some previous regional newspaper sales have achieved - the amount could top pounds 400m.

However, the fever for regional titles may have diminished, following a disappointing valuation for shares in Newsquest, the regional newspaper group that was floated in October. The group was capitalised at pounds 500m, on sales of pounds 277m, a sales-to-price ratio of 1.8.

United is ready to walk away from a sale if the price is too low, according to sources close to the deal. So far, however, the indications are that the UK titles will go on schedule.

Executives from Trinity were unavailable for comment. The group would benefit from regional overlap with its own titles, which include the Liverpool Daily Post. Consolidation would bring substantial cost benefits, from distribution and printing from the same site.

When United exits from regional press, it will be the last big disposal by a publishing giant, leaving only Northcliffe, owned by the parent of the Daily Mail. Yet regional newspapers remain attractive, because they deliver an audience that is otherwise inaccessible.