Trinity Mirror PLC (LON:TNI), the publisher of the Daily Mirror newspaper, has announced that it is in talks to buy all of Richard Desmond's Northern & Shell publishing assets, which includes tabloid rivals the Daily Express and The Star.
The newspapers group had previously revealed in January that it was in talks about taking a minority stake in a new company that included the Northern & Shell titles, but today it said those discussions had ceased.
READ: Struggling red-top newspapers, Daily Mirror and Daily Express could be about to come under the same ownership
In a brief statement, the small cap firm said: “There is no certainty that any transaction will be agreed or completed. Any acquisition would require the approval of Trinity Mirror shareholders.”
It added: “A further announcement will be made when appropriate.”
A combination of the Mirror newspapers and those owned by controversial media mogul Richard Desmond would unite titles that rank fourth, sixth and eighth respectively in the national rankings compiled by ABC.
In mid morning trading, Trinity Mirror shares were 0.8%, or 0.75p higher at 91.5p.
Analysts estimate that the revenue of the Northern & Shell publishing assets is around £200mln.
They think that any purchase would be on a cash free debt fee basis, but one of the big unknowns will be the potential position of the group’s pension fund.
They also anticipate that given today’s update a deal is imminent and if completed should be announced before the year end.
Penthouse, OK!, Channel 5
Desmond established his media empire by publishing specialist magazines, including adult titles like the British edition of Penthouse. He launched celebrity title OK! in 1993.
He bought the Express titles, which also include the Sunday Express, in 2000 for £125mln, but rumours that he could be looking to offload the newspapers have been around for a while as Northern & Shell has been slimming down its other media holdings.
Northern & Shell sold UK terrestrial broadcaster Channel 5 to US broadcaster Viacom Inc (NASDAQ:VIA) for £463mln in May 2014, In April last year, the firm sold its adult television network, Portland.
Back in January, Sky News had also reported that ex-Mirror, Local World and Mecom newspaper magnate David Montgomery was in talks with potential backers about a bid for the Northern & Shell titles.
It noted that, under Montgomery's plans, the new company and Trinity Mirror would be able to generate substantial cost savings by combining their back office operations,
UK newspaper groups have been battling against falling print circulation and weakening demand from advertisers.
At the end of July, Trinity Mirror reported results showing revenue in the half year to June fell by almost 15% to £320mln or by 9.3% on a like-for-like basis, with profits 12% lower at £47.3mln.
The Mirror owner saw cost-cutting save it £10mln through retrenchment in the first half and it upped its target for the full year to £20mln, £5mln above the original after another cull of regional managers.
But the newspaper group pleased investors by upping its interim dividend to 2.25p from 2.1p.
-- Adds share price, analyst comment --