DAILY MAIL & General Trust (DMGT) yesterday sold off its regional newspaper arm to a consortium led by the former chief executive of the Mirror Group, David Montgomery, in a deal that forms a new British media firm.
The firm, called Local World, will consist of Northcliffe’s more than 80 papers, with 36 titles from local newspaper publisher Iliffe also brought into the group.
DMGT has sold the business for £52.5m in cash and a 38.7 per cent stake in the new group, with Northcliffe boss Steve Auckland taking the chief executive position at Local World. The Yattendon Group, which owns Iliffe, will take a 21.3 per cent stake in the company, while Daily Mirror owner Trinity Mirror has paid £14.2m for 20 per cent of the venture – although its own regional papers will not become part of the group.
Other shareholders include City fund manager Crispin Odey and Lord Ashcroft’s Artefact Group.
Montgomery – who served as Mirror Group chief from 1992 to 1999 and founded the European newspaper publisher Mecom – will become chairman of the new company.
“I have had a vision for some time that the regional newspaper industry needed to change,” Montgomery said yesterday, as he outlined a new vision for the struggling sector, focusing on online services. “Local publishing is not going to die, the means of distribution are going to change,” he said.
The deal was welcomed by analysts, despite the fact that it will earn DMGT far less than the £1.2bn private equity bid for Northcliffe it reportedly turned down in 2005.
WHO’S INVOLVED IN LOCAL WORLD
The Northcliffe boss will be chief executive of Local World, while Northcliffe owner DMGT will own 38.7pc of the firm
The prominent City asset manager has invested in the firm, and is contributing one board member.
Iliffe is chief executive of the Yattendon Group, owned by the Iliffe family - who have a 21.3 per cent stake.
Montgomery, the former chief Executive of Mirror Group, will be chairman at the new company.
The Trinity Mirror chief executive will sit on the board, representing the company’s 20 per cent stake.
Artefact Group, an investment fund associated with the former Tory Deputy Chairman, is a shareholder
ADVISERS DMGT SALE TO LOCAL WORLD
UK HEAD OF INVESTMENT BANKING AT LAZARD
DMGT turned to long-standing advisers at Lazard to work on the sale of its local arm. UK head of investment banking Nicholas Shott leads the team.
Shott is no stranger to the industry. He was involved in the sale of the Telegraph to the Barclay brothers in 2004, and the Lebedevs’ 2009 purchase of the Evening Standard.
He also wrote a report for then-culture secretary Jeremy Hunt on the local television market in 2010.
Local World took on boutique merchant bank Lepe Partners as its adviser. A relatively new firm on the scene, media-focused Lepe was founded last year by former LongAcre chief executive Jonathan Goodwin.
Its advisory board includes media luminaries such as Brent Hoberman, the co-founder of Lastminute.com and Michael Jackson, the former C4 chief executive.
Morrison & Foerster gave legal advice to Local World, with a team fronted by Edward Lukins, Mary Lappas, Trevor James, Alistair Maughan and Daniel Leventhal.
MoFo, as the US firm likes to be known, set up a London office in 1980 and has built a reputation for its expertise in up-and-coming companies.