SHARES in Mirror Group Newspapers (MGN), publishers of the Daily
Record, Sunday Mail and Daily Mirror, lost almost two-thirds of their
value when they were relisted on the London Stock Exchange yesterday.
The shares were suspended at the flotation price of 125p in December
as the extent of the Robert Maxwell frauds became known.
At 50p, MGN is valued at #200m compared with #500m at the time of
flotation in May last year. By the close MGN shares were at 52[3/4]p in
turnover of nearly 20 million shares.
With such a low market capitalisation the group could fall prey to a
bidder but they would first have to secure the agreement of 54%
shareholder John Talbot, the administrator of Maxwell's private
companies from accountancy firm Arthur Anderson.
Speaking at the annual meeting on Thursday, Sir Robert Clark, MGN's
chairman, acknowledged this, saying that ''the chances of a dawn raid up
on us are very small''.
Just what rich pickings MGN provides to any potential bidder is
demonstrated by the fact that at 50p, the Mirror would be selling on a
multiple of last year's cashflow, adjusted for extra pension costs in
the wake of the Maxwell frauds, of just 1.8 times. This compares with a
figure of 10.8 times for the Daily Telegraph.
Among those who could be interested in bidding for MGN are a
management buy-out team led by former British Rail chief Sir Peter
Parker, Tony O'Reilly of Heinz, Conrad Black's Daily Telegraph, and a
consortium backed by Hambros merchant bank.
At the annual meeting the underlying strength of MGN's trading
performance was demonstrated in the publication of results for 1991
which showed that trading profit on continuing operations rose by 12% to
#91m with a margin on sales of almost 20%. Circulation revenues, which
accounted for almost two-thirds of turnover, increased by 5% to about
#296m. However, after writing off about #500m to make up for various
deficiencies as a result of the Maxwell frauds, MGN made an overall loss
of #388m in 1991.
The Daily Record and the Daily Mirror together held their combined
position compared with main competitor, The Sun, despite small losses of
market shares in the popular market. The Daily Record holds 56.7% of the
popular Scottish market and the Sunday Mail nearly 36%. At the annual
meeting, the MGN board was given an overwhelming vote of support from
shareholders, helped by a vote in favour by the administrator who holds
54%.
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