Trinity Mirror has confirmed it is to buy regional publisher Local World in a deal which values the group at £220m.
Local World was valued at £100m when it was created three years ago.
Trinity Mirror has said it will deploy its "know-how" on cutting costs at its existing regional newspapers to cut £12m from Local World's budgets. Some £3.2m of the annual cuts will come from "content generation", ie. journalism.
Trinity Mirror already owned a 20 per cent stake in Local World. In a statement the company said it was buying the remaining 80 per cent for £154.4m.
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The enlarged group will be the UK's biggest local newspaper publisher with combined weekly circulation (according to Trinity Mirror) of 9m including: 36 daily newspapers, eight franchises to produce Metro outside London, 88 weekly paid-for newspapers, five Sunday newspapers and 43 weekly free newspapers.
It will be double the size of each of the next two largest regional press publishers, Newsquest and Johnston Press, which each have a combined weekly print circulation of around 5m copies.
Trinity Mirror paid £14.2m for its share in Local World when the group was created in January 2013 out of the merger of the Northcliffe and Iliffe News and Media. Iliffe's owner Yettendon retained 21.3 per cent of Local World in the original deal and Northcliffe parent company Daily Mail and General Trust kept 37.8 per cent.
Trinity Mirror chief executive Simon Fox said in an email to staff: "I am delighted to announce that Trinity Mirror has today confirmed it is to acquire Local World. This transaction is subject to the approval of shareholders and is expected to complete on the 13th November.
"This significant investment is evidence of our commitment to the regional press industry in general and to the high regard we have for Local World in particular."
The announcement said: "The acquisition values Local World on a debt-free cash-free basis at £220 million. The purchase price for the 80.02 per cent. shareholding not already owned by Trinity Mirror is £154.4 million, being the Sellers' total share of the equity value of £193 million. Trinity Mirror will also assume debt, working capital and debt-like items of circa £27 million and will incur some £6 million of transaction costs at completion which together with the equity consideration represents total consideration of £187.4 million."
In his email, Fox said: "By bringing our two organisations together, we create not just the UK's largest regional news publisher, but also bring together a unique combination of regional and national brands.
"This is good news for both businesses: we immediately become a larger, more resilient and more financially secure organisation, better placed to adapt to the rapidly changing media landscape.
"The geographic fit of the titles in our two businesses is perfect, enabling us to provide our advertisers with a wider geographic footprint and a greater, more efficient reach.
"In fact, following the acquisition we will own more than half of the top 20 regional paid daily titles in England and Wales and provide daily local news reach into 14 of the top 25 cities in the UK. It will also give us a digital network of scale, reaching 120m monthly unique browsers, helping us to leverage our digital investments and compete more effectively in this space."
Local World chief executive David Montgomery said: "Local World was founded three years ago with a clear vision to reinvigorate regional media with an unrelenting focus on our content, audience and advertisers. I am proud of what we have achieved. Local World is full of energy and talent and Trinity Mirror is acquiring a vibrant business with a strong future. I want to take this opportunity to thank everyone who has made Local World the success it is today.”
Trinity Mirror is financing the deal with £67.3m of cash reserves, a new five-year £80m loan, raising £5.3m through issuuing 3,371,010 new ordinary shares and selling 22,398,041 shares to raise £34.8m.
Local World includes: 16 daily newspapers, two Metro franchises, 36 paid-for weekly titles and 29 free weekly titles.
In June 2015 it claimed a total monthly digital audience of 24m unique browsers. Trinity Mirror claimed to attract some 30m unique browsers across its regional titles in the same month.
According to Trinity Mirror, Local World generated operating profit of £39m in 2014 on turnover of £221m.
Montgomery and corporate development director Lisa Gordon will both leave the business after the sale is completed.
Local World chief operating officer Rachel Addison is to be promoted to managing director of the business.
The Local World portfolio
- Bristol Post
- Burton Mail
- Cambridge News
- Derby Telegraph
- Gloucestershire Echo
- Grimsby Telegraph
- Hull Daily Mail
- Leicester Mercury
- Nottingham
- Post
- Nuneaton News
- South Wales Evening Post
- Stoke The Sentinel
- The Gloucester Citizen
- The Plymouth Herald
- Western Daily Press
- Western Morning News
- Bristol
- East Midlands
Paid weeklies
- Ad Mag – East Midlands
- Ashbourne News
- Telegraph
- Bath Chronicle
- Black Country Bugle
- Brentwood Gazette
- Carmarthen Journal
- Cornish Guardian
- Croydon Advertiser Series
- Dorking & Leatherhead
- Advertiser
- Essex Chronicle
- Exeter Express & Echo (bi-weekly, Mon & Thu)
- Herts & Essex Observer
- Herts Mercury Series
- Grantham Target
- Isle of Thanet Gazette
- Kent & Sussex Courier
- Leek Post & Times
- Lincolnshire Echo
- Llanelli Star Series
- Mid Devon Gazette Series
- Mid Somerset Group
- North Devon Journal
- Retford Gainsborough &
- Worksop Times
- Scunthorpe Telegraph
- Sevenoaks Chronicle
- Somerset Guardian
- Somerset Standard
- South Lincs Target Group
- Staffordshire Newsletter
- Surrey Mirror
- Tamworth Herald Series
- The Cornishman
- Torquay Herald Express
- Uttoxeter Adver
- tiser
- Wells / Shepton Mallet
- Journal
- West Briton
- Western Gazette
- Western Morning News on Sunday
Free weeklies
- Bristol Observer Group
- Bedfordshire on Sunday
- Beverley Advertiser
- Blackmore Vale Magazine
- Cambridge News & Crier
- Canterbury Times
- (Series)
- Crawley News
- Dover Express Series
- East Grinstead Courier &
- Observer
- Ely Weekly News
- Folkestone Herald Series
- Great Barr Observer
- Harlow Star Series
- Herts & Lea Valley Star
- Huntingdon/St Ives & St
- Neots News & Crier
- Leicester Mail Group
- Lichfield Mercury Series
- Luton & Dunstable on
- Sunday
- MK News
- North Herts Advertiser
- North Somerset Mercury
- Northampton Herald &
- Post
- Nottingham and Long
- Eaton Topper
- Nuneaton News
- Sentinel Advertiser
- Stour and
- Avon Magazine
- Stroud Life
- Sutton Coldfield Observer
- Walsall Advertiser
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