Trinity sells Racing Post, pulls other titles off the market
01/10/2007
Trinity Mirror plc has announced the sale of its Sports Division and the decision to retain its assets in the Midlands and remaining assets in the South East. This enables the Group to move forward with a more tightly focussed portfolio of multi-platform media assets and to develop its technology-led operating model for the Group as a whole.
The Group has agreed to sell its Sports Division, including the UK’s premier racing newspaper the Racing Post and the related racing and sports newspapers and websites, for £170 million in cash representing a multiple of 3.4 x 2006 revenues and 11.2 x 2006 operating profit.
The business is being acquired by Stradbrook Acquisitions Limited, a company established by FL Partners, an Irish investment boutique. His Highness Sheikh Mohammed bin Rashid Al Maktoum, who founded the Racing Post title in 1986 was informed of the sale. At his suggestion it has been agreed that donations totalling £10 million will be made by Trinity Mirror to four specified charities connected to the horse racing industry as a condition of the transfer of a licence to use the Racing Post trademark.
As part of the sale, Trinity Mirror and Stradbrook Acquisitions have also entered into various long term services agreements including printing, distribution and IT.
In December 2006, following a review of all its businesses, the Board concluded that in order to maximise shareholder value for the medium to long term it should rationalise its portfolio of titles. The Review identified that the Group’s regional businesses in Scotland, the North of England, and Wales, complemented by its well positioned UK wide digital assets and supported by the strong cash flows of its national titles, represented the best opportunities for growth.
As a result it also identified that its regional businesses in the Midlands and London and the South East, and the Sports Division were potential candidates for disposal. The Board subsequently engaged investment banking advisers to procure offers for the businesses.
At the start of this process, the Board considered that these assets would be worth more to other parties than to Trinity Mirror. However, ultimately it became clear that offers received for some of the Group’s assets did not reflect the Board’s assessment of their true value, their earnings potential or the strong positions they hold in their particular markets.
The Board has therefore decided to retain its business in the Midlands and the two remaining businesses in the South East. The Board is clear that this decision will deliver greater value to shareholders than a sale in current market conditions.
The overall disposal programme will raise a total of £263 million from the sale of seven businesses in London and the South East and the Sports Division. The Board intends to return to shareholders surplus capital arising from the disposals, net of related transaction costs and such pension payments as are necessary. We do not envisage a tax liability on these disposals.
Sly Bailey, Trinity Mirror Chief Executive, commented: “We believe it is now right to bring our disposal process to a close. The process will enable Trinity Mirror to go forward as a more tightly focussed media group, which is nimbler and more able to respond to the opportunities in its markets. It has also released a significant amount of capital, which we intend to return to shareholders.
“Throughout this process we made it clear that we were not prepared to sell our high quality media assets at any price. It is clear to us that offers for the businesses we are retaining in the Midlands and the South East did not reflect their true value. Conditions in the debt markets have inevitably impacted on the positions of potential bidders.
“We have therefore chosen to retain these businesses and to develop their market positions in both print and digital. They will also benefit from our new technology-led operating model, which is already having a significant impact on the profitability and performance of other Group businesses.”
Trinity Mirror was advised by Rothschild in connection with this process.
