'Independent' board supports consortium bid
Thursday 03 March 1994
Having enlisted board support for a pounds 74.7m revised bid, it secured its position by purchasing 11 per cent of the company's shares from institutional shareholders, subject to regulatory approval. The Spanish and the Italians, with the company's founders, already own 47 per cent of the company.
Under the new takeover terms the Italian and Spanish publishers, which led a rescue of Newspaper Publishing in November 1990, will have voting control. Mirror Group has also renounced its right to vote on the appointment or dismissal of the editors of the Independent titles.
Any transfer of control of a national newspaper automatically triggers a referral to the Monopolies and Mergers Commission unless the President of the Board of Trade is satisfied the newspaper is not economic as a going concern and the issue is urgent. The consortium bid is conditional on no MMC investigation.
However, the support of independent directors on Newspaper Publishing's board responsible for advising shareholders on the bid makes a referral unlikely.
They said the financial and ownership position of the newspapers needed to be resolved as quickly as possible. They are to ask Michael Heseltine, President of the Board of Trade, not to refer the takeover.
The independent directors described the consortium's offer of 355p in cash or 104.5p in cash plus 1.35 new MGN ordinary shares, as attractive and urged shareholders who were not members of the consortium to accept the offer.
However, a spokesman for Independent Newspapers, the Irish newspaper group controlled by Tony O'Reilly which has taken a 29.9 per cent stake in Newspaper Publishing, said it would not be accepting the bid. 'We are not for selling, we are for staying.' The consortium's cash offer, which is 5p higher than the 350p at which Independent Newspapers acquired its stake, proved what a good investment it had made, he added.
However, a mooted counter-bid by Dr O'Reilly looks unlikely, given that the consortium effectively controls 58 per cent of the company. Moreover, the Takeover Panel, which regulates City bids, has indicated that Independent Newspapers will be bound by a promise it gave not to pay more than 350p for additional shares - less than the consortium's cash offer.
The newspapers' chapel (branch) of the National Union of Journalists, which wants the bid referred to the MMC, said it was not satisfied by guarantees of editorial independence given by the consortium. The takeover endangered the founding principle of the newspapers, it said. The independent directors, however, welcomed the pledges made by the consortium and the Editor- in-Chief regarding editorial independence.
If successful, the bid is expected to lead to redundances among non-editorial staff when the company moves to MGN's headquarters at Canary Wharf in London Docklands. Administrative and printing functions will be merged with MGN's newspapers.
The deadline for making submissions on an MMC enquiry is today and a decision by Mr Heseltine is expected within the next couple of weeks.
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