A person arrives at the headquarters of Express Newspapers in central London, Britain, February 9, 2018. REUTERS/Simon Dawson
© Reuters

Necessity has made few stranger bedfellows than the Daily Mirror and the Daily Express. The two UK tabloids will share a common owner after Trinity Mirror buys a bundle of titles from Northern & Shell for £197m in cash, shares and pension contributions. The Mirror and the Express articulate opposed political views via a shared fondness for bold text and sometimes even CAPITAL LETTERS.

Falling volumes are a feature shared with many other newspapers. This was reflected in a 10.4 per cent year-on-year drop in the circulation of the leftwing Mirror to 725,000 in January, according to Press Gazette. The rightwing Express fell 4 per cent to 392,000. Putting the two stables together gives Trinity boss Simon Fox the chance to save at least £20m a year.

This makes a cheap deal look even cheaper. Allowing for cash, the enterprise value of £184.2m is only 3.4 times last year’s earnings before interest, tax, depreciation and so on. Some savings will come from combining editorial desks, for example in sports reporting. Political writers will remain separate. Crashing gear changes would otherwise be required to back Labour and the Tories, in particular Brexiter Jacob Rees-Mogg.

The transaction would be costlier if earnings fall. Mr Fox, who previously ran music store chain HMV, is good at making the best of a bad situation. Trinity’s ebitda has pegged along at around £140m a year and digital revenues are rising. But even after a 5 per cent jump in the shares on Friday, the group’s market worth was only £201m. UK investors are as suspicious of newspaper shares as Express readers appear to be of foreigners.

The stock yields a stonking 8.5 per cent partly because dividends are imperilled by large pension liabilities. Mr Fox has the benefits of boldness and CAPITAL (Trinity is raising £75m to help pay for the deal). But retreating to greatness is a hard act to pull off, both for media bosses and Brexiters like Mr Rees-Mogg.

Lex recommends the FT’s Due Diligence newsletter, a curated briefing on the world of mergers and acquisitions. Sign up at ft.com/newsletters.

Get alerts on Mergers & Acquisitions when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article