DMGT: sweetened deal will leave a bitter aftertaste

The Daily Mail likes to stick up for the little guy in its coverage. Minority shareholders in Daily Mail and General Trust, which owns the newspaper, will not get the same courtesy.

Lord Rothermere, whose company RCL is bidding to take it private, offered a fresh carrot along with a stick to remaining holdouts on Thursday. The price offered for DMGT shares was increased by 6 per cent to 270p, while the acceptance threshold was lowered to half.

Including the shares already owned by RCL, acceptance is already at 42 per cent. After a two-week deadline, it will almost certainly be the end of DMGT’s near 90 years of life on UK public markets. In a world of hyperinflated tech valuations, the price for the world’s most popular news website is not that high. Holders have a right to complain but they should do so quietly.

Some fund managers might sell out early, unwilling or unable to be minority investors in an unlisted business. But doing so would mean missing out on the whopping £2.1bn special dividend, made up of cash and shares, from the listing of online used car dealer Cazoo, in which DMGT had a sizeable stake.

But even then, a recent fall in the Cazoo share price means that figure is still about £200m less than when the offer was first announced. Even with the extra offered for DMGT shares, the total value of the deal is 5 per cent lower now at £2.75bn.

Excluding the distributions, the offer is far from generous. Take out the £2.1bn and DMGT then has an enterprise value of just £885m — taking account of extra pension contributions — or about three-quarters of expected sales next year.

No wonder shareholders protested at the original terms. BuzzFeed plans to reverse on to the New York stock exchange at a value of three times this year’s sales. A similar valuation for MailOnline would fetch about £500m on its own.

Shareholders should find some solace though. Their total returns have been twice those of the FTSE All-Share index over the past 10 years in an industry many have written off as dead. The little guy may be getting a whack but he should not feel too sore about it.