Rothermere Family in Talks to Take Daily Mail Private

(Bloomberg) -- The Rothermere family is weighing a plan that could break up the owner of Britain’s Daily Mail newspaper and take it private, following an approach for the company’s insurance and risk division.

The restructuring, if successful, would see the Daily Mail’s corporate structure begin to resemble its liberal rival newspaper The Guardian, a newspaper group supported by a trust and select venture investments.

Under the proposed deal, which is contingent on selling the RMS unit, Rothermere Continuation Ltd. would pay 251 pence per share in cash and a special dividend valued at about 610 pence per share -- which includes cash from the asset sale and a distribution of stock in online auto-marketplace startup Cazoo -- the Daily Mail & General Trust Plc said in a statement Monday.

All told, that could value DMGT’s assets at about 1,280 pence per share, a 23% premium to the closing price on Friday, analysts at Barclays Plc said in a note. The proposal follows years of asset sales for the group and the resulting company would be dominated by its news business, which includes the Metro and i newspapers.

“The liquidation of DMGT has been underway probably for two to three years now,” said Alex DeGroote, a media analyst in London. “Anyone who’s ever worked with DMGT or with the Rothermeres has always known that newspapers are very close to their hearts,” he added, pointing out that they have acquired print titles like the i newspaper and New Scientist in recent years while divesting other businesses.

DMGT rose 1.4% to 1,054 pence in London at 10:17 a.m. after earlier jumping as much as 10%. The shares have risen about 42% this year, giving the company a market value of 2.4 billion pounds ($3.3 billion).

The offer also depends on Cazoo completing its $7 billion merger with blank-check company Ajax I, which will result in a New York stock market listing for the auto marketplace. DMGT will hold about 16% of Cazoo once the deal is finalized.

Rothermere’s deal implies an enterprise value of 810 million pounds for the remaining DMGT business after it sells the RMS assets and excluding the value of the Cazoo shares and the cash portion of the special dividend, DMGT said.

DMGT’s Chief Executive Officer Paul Zwillenberg has spent recent years selling off the company’s holdings, including education technology unit Hobsons, property marketplace Zoopla, financial information company Euromoney, and energy data business Genscape.

“DMG media has and will continue to be the cornerstone of the group,” executives told staff in an internal memo Monday seen by Bloomberg. It also said the company is hiring a deputy chief financial officer to help steer the restructuring, James Welsh.

The company’s independent directors have told the Rothermeres the plan “will represent attractive value” for the company’s shareholders and they’d be inclined to recommend it if a firm offer was made.

Jonathan Harmsworth, known as Lord Rothermere, chairs DMGT and his family’s trust owns all of DMGT’s voting shares and about 30% of the company’s overall stock. The paper was founded by the family in 1896, according to DMGT’s website.

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