Trinity walks away from Mirror Group deal

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The Independent Online
MERGER TALKS between Mirror Group and Trinity, the regional newspaper publisher, have collapsed for the second time in a year amid accusations that David Montgomery, Mirror Group's chief executive, is blocking a deal in an attempt to save his job.

In a one-line statement issued yesterday, Trinity said it was withdrawing from merger discussions with Mirror "with immediate effect". Senior Trinity executives are understood to have pulled out after concluding that Mirror's board is not fully committed to a deal.

Mr Montgomery and John Allwood, the Mirror director in charge of its regional newspaper interests, met Trinity executives last week to discuss the possibility of a merger. But the talks, which have been dragging on since November, ended without an agreement.

Both companies refused to comment yesterday. But Trinity, which publishes the Liverpool Echo and the Huddersfield Daily Examiner, is understood to have proposed an all-share deal which would place a value of pounds 1.3bn on the combined company and leave Mirror shareholders with 55 per cent of the enlarged equity.

Philip Graf, Trinity's chief executive, would run the company while Mr Allwood would become his deputy. But Mr Montgomery would be sidelined with a job overseeing the integration of the two companies. Trinity directors are adamant that there is no confusion about who would be in charge of the combined company.

Sir Victor Blank, Mirror's recently appointed chairman, is said to support the idea of the merger. But the company's executive directors, led by Mr Montgomery, argue that the deal undervalues Mirror. The group's share price has fallen sharply in recent months and closed at 162p on Friday.

Mr Montgomery is believed to have held discussions with venture capital groups about the possibility of leading a management buyout of the company. But potential buyers have been put off by Mirror's heavy debt load. Mirror Group is today expected to clarify its position with a Stock Exchange announcement.

Trinity and Mirror held merger talks last year, but discussions broke down when Axel Springer, the German publishing group, expressed an interest in bidding for Mirror. Springer eventually walked away after concluding that Mirror's asking price - reportedly 300p per share - was too high and the UK newspaper market too competitive.