Blow to Trinity bid for Mirror Group

TRINITY'S HOPES of renewing its pounds 1.4bn bid for Mirror Group were dealt a potentially fatal blow yesterday after Stephen Byers, the Trade and Industry Secretary, approved the takeover but only on condition that the regional newspaper group sell its most profitable title, the Belfast Telegraph.

Sources close to Trinity expressed disappointment with Mr Byers' decision, which went further than recommendations to him by the Competition Commission, but stressed that the regional newspaper publisher remained likely to pursue a deal.

Analysts noted that Trinity, having pursued the titles since last autumn, could become prey in the consolidation of the regional newspaper industry should it back down from completing the takeover.

Meanwhile, sources close to Regional Independent Media, whose takeover bid was approved without conditions, said they were still considering a bid and noted that Mr Byers' ruling was a significant setback for Trinity. "Whatever price they get for the Belfast Telegraph will impact what they can offer [for Mirror]," said one insider.

That view was echoed by advisers to David Montgomery, the ousted Mirror chief executive, who re-emerged last week to announce a possible bid pending talks over funding with financial backers understood to be KKR, the US leveraged buyout firm.

What stunned City observers and newspaper executives alike was Mr Byers' strict emphasis on preserving newspaper advertising competition as well as viable political voices among Northern Ireland's newspapers. He singled out the nationalist Irish News, which the Competition Commission didn't believe would be threatened by a Trinity acquisition of Mirror Group.

Some analysts had expected Trinity and Mirror to unveil an agreed bid, brokered by City firm Salomon Smith Barney, within hours of the DTI verdict. What is certain is that Mr Byers' decision changes the financial assumptions of a Trinity takeover of Mirror Group. The Belfast Telegraph, formerly part of Thomson regional newspapers, accounted for more than 20 per cent of Trinity's 1998 earnings of pounds 84m.

Should Trinity succeed in agreeing a deal with Mirror Group, the sale of the Belfast Telegraph would be required within six months. Analysts said the title could probably command in excess of pounds 150m. Last night a spokesman for Independent News & Media, publisher of The Independent, said the company would look closely at buying the title. Outlook, page 21