Trinity Mirror is to take full ownership of Local World in a deal which will make it the biggest local newspaper company in the UK.
The deal, which values Local World at £220m, will see the newly-merged operation control local newspaper publishing in most of the biggest UK centres of population.
But the deal will not include the Cambridge News and other LW-owned weekly titles in Cambridgeshire and Hertfordshire, which are to be returned to their former ownership under the Iliffe family which owns Yattendon group.
Iliffe is to pay Trinity Mirror £15.8m to re-acquire the titles, which were originally sold to Local World in 2012. The Iliffe business owns 21.3 per cent of Local World.
Trinity Mirror has owned 20pc of Local World since the company was created from the merger of Northcliffe Media and Iliffe News and Media three years ago.
It is now paying £154.4m to buy the remaining 80pc shares, valuing Local World on a debt-free cash-free basis at £220m.
Trinity Mirror will also take on debt, capital and debt-like items of around £27m and will incur some £6m of transaction costs at completion, which is expected to take place on 13 November.
The deal will see Local World chief executive David Montgomery leave the business, but chief operating officer Rachel Addison will stay on in a new role of managing director, Local World, reporting to TM chief executive Simon Fox.
In a statement, the TM board said the deal would transform Trinity Mirror into the UK’s largest regional news publisher, create a “stronger and more resilient organisation,” enhance its digital reach and deliver “cost synergies” of around £10-12m.
It said it expected the purchase to be “earnings enhancing” in the first full year following the acquisition.
Simon Fox, pictured, said: “This is a good day for local media. Local World is a business we know and respect and by combining it with Trinity Mirror we will create an organisation of scale, with the talent and financial capacity to invest and adapt to the rapidly changing media landscape.
“It is a vote of confidence in local press and its future.”
David Montgomery added: “Local World was founded three years ago with a clear vision to reinvigorate regional media with an unrelenting focus on our content, audience and advertisers. I am proud of what we have achieved.
“Local World is full of energy and talent and Trinity Mirror is acquiring a vibrant business with a strong future. I want to take this opportunity to thank everyone who has made Local World the success it is today.”
Trinity Mirror is funding the deal from a variety of sources including cash resources, borrowing and issuing new shares.
The overall costs of £187m – including the purchase price and the transaction costs – will be met from £80m borrowing, £67m in cash resources, and £40m in share issues.
Local World’s print portfolio comprises 83 print publications including 16 dailies, 2 Metro franchises, 36 paid-for weeklies and 29 free weeklies.
Its portfolio of websites attracted 24m monthly unique browsers and approximately 167m monthly page views in June 2015.
The disposal of LW to Trinity Mirror has largely been driven by DMGT, the biggest shareholder in the company with a stake of 38.7pc.
It has long wanted to see consolidation in the UK regional newspaper market, while making clear that it would not be the consolidator.
In a statement to shareholders today, DMGT said: “DMGT has been a shareholder in Local World since its formation on 30 December 2012. During that time, Local World has generated positive returns for its shareholders. In the year to 30 September 2014, DMGT’s share of Local World’s operating profits was £15m.
“The combination of Trinity Mirror’s and Local World’s assets will create the largest regional news publisher in the UK. The enlarged business will benefit from Trinity Mirror’s track record of successful cost management, creating scope for cost synergies.”
