Rothermeres consider taking Daily Mail owner DMGT private

The Rothermeres are considering taking the owner of the Daily Mail newspaper private in a deal that would value the group at £810m.

London-listed Daily Mail and General Trust, which spans news, events and data, said the holding company of executive chair Jonathan Harmsworth, the Viscount Rothermere, would consider a bid after receiving an approach for its insurance risk business.

Pending that deal and the previously announced flotation of used car retailer Cazoo, in which it holds a 20 per cent stake, DMGT said the Rothermeres “would be prepared to make a possible cash offer” to acquire the rest of the shares and take DMGT private.

It would be a milestone for the company, which traces its roots back to the first issue of the Daily Mail, published in 1896 by Harmsworth’s great-grandfather. The group floated in 1932, a decade after it was formed to manage the family’s business interests that stretched beyond the newspaper empire.

The Rothermeres own 36 per cent of DMGT, but Harmsworth — who inherited his role as the company’s chair and controlling shareholder on the death of his father in 1998 — has owned all voting shares since 2013, meaning that any deal recommended to shareholders that has his backing will be approved.

DMGT’s dual shareholding structure, split into voting and non-voting shares, has no mechanism for minority investors, which include Lindsell Train, Artemis and Schroders, to rebel.

“It’s probably not a knockout bid” at this valuation and “it’s slightly opportunistic on the family’s part”, said a top-10 shareholder in DMGT. “Equally the stock market is clearly not valuing this business appropriately.”

The potential restructure would take DMGT’s media and events divisions private, as well as its property information businesses Landmark and Trepp, and its venture capital arm, which has about a dozen investments, such as the stake in Cazoo.

Shareholders would receive 251p for each share in addition to a special cash dividend of about 610p per share, giving the smaller company an enterprise value of £810m.

While it is “theoretically correct” that the dual-voting structure means that a take private deal could go through without the approval of minority shareholders, “this is a business that might want to bring companies back to the stock market at some point in the future and so won’t necessarily want to totally burn its bridges [with investors],” the top-10 shareholder added.

“We may be at the point where we can potentially extract a higher bid . . . I don’t necessarily think this is a situation where the family will use their power as a fait accompli. They will be quite pragmatic about it. They see the opportunity based on the valuation.”

It would be the latest in a series of shake-ups for DMGT, which in recent years has disposed of education business Hobsons, energy data operation Genscape and Zoopla, the property site. It has also distributed its stake in financial publisher Euromoney to shareholders and acquired the I newspaper as well as New Scientist magazine.

Without Cazoo and the insurance business, media assets would make up a significantly larger proportion of DMGT. “Public market investors have not shown love to media businesses for quite some time,” one person close to the company’s management team said.

Thomas Singlehurst, analyst at Citi, said the potential reorganisation of the business depended on many conditions, adding “there is also the question as to whether a bid . . . at [less than one time] sales is sufficiently generous”.

DMGT’s share price, which has risen more than 60 per cent over the past year, was up 2.7 per cent.

As with its peers, DMGT has struggled during the coronavirus pandemic as advertising suffered a severe hit. Underlying revenues fell 10 per cent to £1.2bn in the year to September, while pre-tax profit dropped 36 per cent to £72m.