Trinity and Mirror Group yesterday confirmed they had agreed a merger to create Britain's largest newspaper publishing group - more than a year after they first talked about a deal.
Mirror's largest shareholder, Phillips & Drew Fund Management, which owns 14.7 per cent of the group, has given irrevocable undertakings to accept the terms, which value Mirror at £1.2 billion sterling, or 267 pence a share.
A competing bidder would have to offer PDFM 301 pence a share. That appeared to reduce the likelihood of a counter-bid from Regional Independent Media or Mr David Montgomery, Mirror's former chief executive. Both last night refused to rule out a rival offer.
A PDFM executive said: "Basically, this is the deal we've always wanted. Any of the cash deals that may or may not exist would have to be at a substantial premium to this one."
Mirror, which publishes tabloid national titles and regional newspapers, and Trinity, whose portfolio includes the Journal (Newcastle) and the Liverpool Echo, together sell or distribute 35 million newspapers a week.
They had originally planned to announce merger terms a week ago, but received a setback when the British government announced that Trinity would have to sell the Belfast Telegraph, one of its most prestigious titles, in order to merge with Mirror.
Mr Philip Graf, Trinity's chief executive who will head the combined entity, said that having to sell the title was a "disappointment". However, he was "very confident we can get value for the disposal". Trinity is believed to have had six expressions of interest to date for the title, which analysts believe will fetch more than £200 million. However, it may try to swap the Belfast Telegraph with another newspaper group's assets.
Mirror shareholders will receive 0.325 new Trinity shares and 82 pence cash for each share. Trinity and Mirror will hold 48.4 per cent and 51.6 per cent respectively of the enlarged capital. Mirror's shares rose 5 1/2 pence to 260 pence; Trinity's fell 14 1/2 pence to 568 1/2 pence.
Annual pre-tax cost savings are expected to amount to at least £15 million by the end of 2002. Both groups announced interim figures yesterday. Trinity reported pre-tax profits of £42.5 million on turnover of £168 million for the 26 weeks to June 27th. Mirror announced profits of £55 million on turnover of £360 million for the 26 weeks to July 4th.
