Mecom rejected Trinity Mirror bid

Mecom rejected Trinity Mirror bid

Mecom, the pan-European newspaper group run by former Mirror Group chief David Montgomery, rejected an approach to merge with Trinity Mirror in mid 2010.

Mecom will hold a board meeting today which will be dominated by discussion of whether Mr Montgomery will remain at the company. 

By Amanda Andrews 12:13PM GMT 12 Jan 2011

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Informed sources said an approach was made by the owner of the Daily Mirror for a nil- premium, all-share merger with Mecom a few months back, but it was soon rejected.

“Mecom is showing strong signs of growth and it does not have Trinity’s pension deficit,” said one source.

While Mecom was hit by the advertising downturn in recent years, it is not faced with the same structural issues as the UK regional newspaper market.

According to Sky News, the approach came from Sir Ian Gibson, the chairman of Trinity Mirror, Mecom chairman Alasdair Locke.

Mecom will hold a board meeting on Wednesday which will be dominated by discussion of whether Mr Montgomery will remain at the company following investor pressure for him to exit.

A trading update tomorrow is set to show strong growth at the company.

Analysts at Collins Stewart believe the trading backdrop for Mecom is improving. "We think that the significant positive shift in cash generation in 2011 will help to drive a rerating in the shares, demonstrating the relative strength of the balance sheet, the strong cash flow underpinning and the ability to grow earnings through deleverage," it said.

Over the past three years, one of the key management focuses has been paying down the debt built up in the Wegener acquisition. Collins Stewart said: "Cash restructuring costs have been high and have significantly masked the strong cash generating capabilities of the business. We believe that this will become strongly apparent in 2011, when we expect to see rapid debt pay-down."

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