This value represents 7.9 times Edda Media’s earnings before interest, taxes, depreciation and amortisation (EBITDA) for 2010 and will help Mecom cut its net debt of €302m (£259m), the company said.
The deal will unite Norway’s second and third largest media groups by revenue, giving them a combined 28 per cent share of the country’s newspaper circulation market.
Mecom’s sale of Edda, its fastest growing division, comes three months after Tom Toumazis joined the company as chief executive and instigated a review of the group in light of a bad six month period that saw Mecom’s shares fall by around half.
Toumazis said: “The sale will of course materially improve our balance sheet. It will allow us to consider, in due course and subject to a refinancing, an enhancement to the company’s cash returns to shareholders, to focus on our future strategy and to invest to improve profitability in the remainder of the group.”
The sale is conditional upon the approval of Mecom’s shareholders and the go-ahead from the Norwegian Competition Authority.
Mecom shares leapt 14 per cent to as much as 215p during yesterday’s morning trading before closing at 197p.
ADVISERS: GLEACHER SHACKLOCK
MECOM chose Gleacher Shacklock to advise on the sale of Edda Media in place of its usual adviser Cenkos, while Pareto Securities acted as adviser on the Norwegian end of the deal.
Leading the team at Gleacher Shacklock was partner Edward Cumming-Bruce, who joined the firm in its early days in 2003.
He had previously worked for Schroders and held several senior positions at Dresdner Kleinwort Wasserstein, including co-head of global telecoms investment banking and global head of equity capital markets. He has also advised Deutsche Telekom, telecoms giant Orange and insurance firm Legal & General.
He said: “The deal has been on the cards for most of the 2010. There has been a lot of talk between several Norwegian media groups about a potential consolidation throughout this year.”
Cumming-Bruce was joined by Gleacher Shacklock vice president Sandor de Jasay, who joined the firm in 2009 from Lazard. His clients include Sky, multiplatform media group Emap and the Government Offices of Sweden.
Mecom was also advised by Norwegian firm Pareto Securities, the investment banking arm of the Pareto Group. Founded in 1986 by Oslobanken, it has since been bought by private investors.
The Oslo team was headed by Tarjei Mellin-Olsen and Simen Landmark Bjørnstad.