Guardian Media Group has agreed to sell its 50.1 per cent stake in the highly-profitable Trader Media Group, the company has announced.
Press Gazette understands that the deal values TMG at £1.8 billion and will net GMG £600 million.
Andrew Miller, chief executive officer of GMG, said: “This proposed transaction makes strategic sense as we focus GMG’s activities on award-winning digital and print journalism.
“On completion, the sale-proceeds will strengthen our balance sheet and position us for further investment and growth in our core business.”
GMG’s sole shareholder, the Scott Trust, has backed the proposed sale and said the proceeds will be reinvested into the business “to safeguard the editorial and financial independence of the Guardian”.
Neil Berkett, chair of the GMG board, said: “Once completed, this deal will make GMG a very well-capitalised media organisation with the financial flexibility to navigate the rapidly-changing media environment, where our flagship titles are proven pioneers of digital and print innovation.”
According to the Financial Times, GMG turned down an offer from Apax in September last year which valued TMG at £1.5bn (including £560m of debt).
This was only slightly more than the £1.35bn TMG was valued at when GMG sold a 49.9 per cent stake to Apax in 2007.
The cash injection will help pay for ongoing losses at GMG’s Guardian News and Media division which includes the Guardian and Observer newspaper titles.
In the year to the end of March 2013 GNM made an operating loss of £30.9m, down from £44.2m the previous year.
Proceeds from the GMG sale will add to the £253.7m of cash and investments which GMG had on hand at the time of its last annual results.
Last year TMG profits contributed £38.3m to GMG's bottom line.
Trader Media employs nearly 1,400 staff across offices in Wimbledon, Reading and Newton-le-Willows in Merseyside.
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