National World, the owner of the Scotsman and Yorkshire Post and underbidder in the auction for the Telegraph titles, has received a buyout proposal from its largest shareholder.
Media Concierge, the biggest player in the Irish newspaper market with 22 local titles including the Derry News, Limerick Leader and Kilkenny People, has submitted a nonbinding proposal valuing one of the UK’s biggest regional and local newspaper groups at £56.2m.
The cash offer by Media Concierge, which is controlled by the media tycoon and racehorse owner Malcolm Denmark , represents a 40% premium to National World’s closing share price on Thursday.
The proposal to take the business private fuels doubt about whether National World will be able to compete for the Telegraph should the preferred bidder, the New York Sun owner, Dovid Efune, fail to secure financing before exclusivity talks expire at the end of the month.
London-listed National World, which is run by the former Daily Mirror executive David Montgomery, acquired the parent company of the Scotsman, Yorkshire Post and more than 100 titles, including the Sunderland Echo and Sheffield Star, for just £10m in 2020.
Media Concierge, which owns 28% of National World, said its offer represented a “highly attractive and deliverable opportunity for National World shareholders to realise their investment at a substantial premium in cash”.
“National World confirms that it has received the possible offer and the company has undertaken a significant amount of work with the company’s financial and legal advisers to evaluate the possible offer,” the company said in a statement. “The board has confidence in National World’s strategy for value creation as an independent business but acknowledges the potential merits of the possible offer.”
However, in the announcement on Friday, Media Concierge said the board of National World and the publisher’s advisers had not made a meaningful response to the potential offer.
“Since the proposal was submitted to the National World board 22 days ago, Media Concierge has made every effort to engage privately with National World and its advisers, but has had no substantial engagement to date,” Media Concierge said.
The company “encouraged” other shareholders to get National World to “engage constructively”.
“It is in the best interest of all National World shareholders that the possible offer be made public to provide them with the opportunity to consider the proposal,” it added.
Shares in National World surged nearly 30% as investors welcomed the prospect of a potential takeover of the publisher.
Under UK takeover rules Media Concierge now has 28 days to “put up or shut up” and make a formal offer, although the company has said it is seeking a recommendation from the National World board to progress further.
Media Concierge, which until September held a contract with National World to sell its national advertising, abstained in a vote to re-elect Montgomery at the last shareholder meeting.
An abstention, while not a vote against re-election, is usually considered to be a signal of no confidence.
In 2012, Montgomery founded Local World, striking deals to bring together 110 titles run by the regional arm of the owner of the Daily Mail and Iliffe News and Media, including the Leicester Mercury, Bristol Post and Cambridge News.
The company was acquired by Reach, which also owns the Star and Express titles, for £220m in 2015.
