Trinity Mirror to take full ownership of Local World

Trinity Mirror plc today announces the proposed acquisition of all of the shares in Local World Holdings Limited not already owned by the Company.

In a statement, Trinity Mirror says:

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.

Strategic rationale

The Board believes that the Acquisition will:

* Transform Trinity Mirror into the UK’s largest regional news publisher;

* Create a stronger and more resilient organisation enabling the Group to accelerate its strategic transformation;

* Further enhance Trinity Mirror’s digital reach. The Enlarged Group’s digital portfolio would comprise a network of publishing websites delivering 120 million monthly unique browsers and 790 million monthly page views; and

* Deliver cost synergies – c. £10 million to £12 million in the second full year of ownership.

The Board expects the Acquisition to be earnings enhancing in the first full year following the Acquisition.

Commenting on the Acquisition, Simon Fox, Chief Executive, Trinity Mirror plc, said: “This is a good day for local media. Local World is a business we know and respect and by combining it with Trinity Mirror we will create an organisation of scale, with the talent and financial capacity to invest and adapt to the rapidly changing media landscape. It is a vote of confidence in local press and its future.”

David Montgomery, Group CEO, Local World, 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.”

Consideration and financing

The consideration for the Local World Shares to be acquired by Trinity Mirror will be payable as a combination of cash and Consideration Shares issued to the Sellers. Trinity Mirror will fund the total consideration for the Acquisition, including related transaction costs of the Company, by

* Utilising £67.3 million of existing cash resources;

* Entering into a new £80 million five-year amortising debt facility;

* Satisfying £5.3 million of consideration through the issue of 3,371,010 new ordinary shares, representing 1.3 per cent. of Trinity Mirror’s existing issued ordinary share capital; and

* Undertaking a placing of 22,398,041 new ordinary shares, representing 8.7 per cent. of Trinity Mirror’s existing issued ordinary share capital to raise net proceeds of £34.8 million, announced separately today (the “Placing”).

Following the Acquisition, Trinity Mirror will continue to benefit from strong cash generation providing financial flexibility for ongoing investment, potential return of capital to shareholders and continued support for Trinity Mirror’s historic defined benefit pension scheme liabilities.