Guardian to sell off profitable Auto Trader in bid to improve rapidly deteriorating finances
The Guardian has begun talks with the private equity group Apax to sell off its remaining share of the car advertising business Auto Trader in an attempt to improve its rapidly deteriorating financial position.
The newspaper’s owner, Guardian Media Group, reported a pre-tax loss of £75.6m in the year to the end of March and its newspaper and website operation Guardian News & Media made a loss of £44.2m.
On Friday, staff unions announced an “official dispute” with management over fears of compulsory redundancies. A voluntary redundancy programme aimed at cutting 100 jobs has found only 40 applicants.
News of the Auto Trader talks prompted comments that the paper was “selling off the last of the family silver”. The publisher has offloaded its regional newspapers, ending a historic connection with the Manchester Evening News, sold its radio interests and closed its television station.
Auto Trader has been an important source of revenue for GMG, although the company sold 49.7% of the business to Apax in 2007 in a deal that valued the stake at £1.3 billion. The private equity group is now seeking to activate a clause in that deal that would allow it to acquire the remainder of the business. Auto Trader’s weekly circulation has fallen by 31% in a year from 124,000 in September 2011 to 85,000 in September 2012.
But the Auto Trader business is still successful and it reported profits of £16.9m in the six months to September. The Guardian tonight reported that the talks with Apax were “tentative” and that a deal – which some accounts suggested could be worth as much as £600m – was “not thought to be likely to result in a transaction”.
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