Denis O'Brien increases his stake in IN&M to 21.17%

AN EXCEPTIONALLY large volume of shares in Independent News & Media (IN&M) changed hands yesterday as the stock came off a widely-tracked index and Denis O'Brien increased his stake in the group to 21.17 per cent from 20.16 per cent.

Data compiled by Bloomberg suggests as many as 60.06 million IN&M shares were exchanged yesterday, or 7.6 per cent of the group's traded stock, on its final day of trading on the Dow Jones STOXX Global Select Dividend 100 Index. Shares closed 4.9 per cent weaker at €1.60.

While it is unclear whether the volumes cited in market data included any element of double-counting as shares were exchanged, heavy trading was perceived to reflect the sale of shares by passive asset managers who follow all movements on the index they track. IN&M said last week that it believed investors tracking the index held 6.5 million shares.

Mr O'Brien's 21.17 per cent stake was declared to the market around noon yesterday. His spokesman declined to comment last night when asked whether he returned to the market after that.

The latest purchase of IN&M shares by Mr O'Brien brings him another step closer to the 25 per cent level at which he can block certain resolutions put to shareholders and closer also to the 26.7 per cent stake held by the group's chief Sir Anthony O'Reilly.

Dow Jones has said IN&M's removal from the Dow Jones STOXX Global Select Dividend 100 Index, which tracks dividend-paying companies in international markets, arose because the stock dropped out of another index it maintains at the last review.

Membership of that index, known as the Dow Jones STOXX 600, is determined by comparisons between a group's net dividend yield and the average net yield of other stocks in its country.

The trading in IN&M stock yesterday came a week before the group reports its financial results for 2007. "I'm forecasting adjusted earnings per share of 18.8 cent for the year, which represents growth of 7.7 per cent. That would be slightly below consensus," said Gavin Kelleher, an analyst at Merrion Capital.

Weakness in the Irish property market and in the value of the South African rand may have an impact on IN&M's outlook for trading this year. "At the moment there appears to be a bit of a technical issue. Given the poor share price performance more recently, we believe a lot of the risk to numbers is already factored in to the current valuation," he said.

"The property market has markedly slowed in the last six months so that's going to have an impact on their advertising revenues in Ireland, which represents circa 15 per cent of Irish advertising revenues," Mr Kelleher said.

"Last year the rand conversion rate was much more favourable from their perspective."