Independent fails in its bid to take over UK media group

THE consortium of Independent Newspapers and the Mirror Group has failed in its bid to buy Westminster Press, a British regional newspaper group. Instead, its owners, Pearson, said yesterday that it had been sold to the Newsquest Media Group Ltd for £305 million sterling.

The deal ends weeks of speculation about the race to buy the titles. At least three bidders were involved and Independent/Mirror was reported at the weekend to have launched a last minute "knock out bid" of £313 million.

Pearson, which owns the Financial Times, announced the deal yesterday, when it published its interim results. Newsquest, a British newspaper publisher, was acquired by the US buy out specialists Kohlberg, Kravis Rober last November from Reed Elsevier.

Westminster's flagship titles include the Brighton Times and the Oxford Times.

The Independent consortium is thought to have made an initial bid of under £300 million. Independent Newspapers is a 46 per cent shareholder in the Mirror group. The consortium has a 50/ 50 arrangement, with each company sharing the funding of such an acquisition. Both are said to be keen to expand their regional network in Britain.

Independent Newspapers is in a fairly strong position to fund acquisitions. In June, Independent Newspapers announced a £106 million rights issue, which will sharply reduce the company's debt. Independent is also being tipped to buy out the O'Reilly family trust's holdings in Australian Provincial Newspapers and the New Zealand newspaper group Wilson & Horton.

Analysts have maintained for some time that Independent is more likely to focus on these areas, which would cost over £150 million.

Meanwhile, Pearson surprised investors yesterday with a better than expected set of first half earnings. Pearson's pre tax profit fell to £30 million from a previous £50 million. But the result was better than consensus forecasts of £17 million and its stock price rose on the news.

Pearson said its results were hit by a loss of £38.8 million from what it called its disappointing venture into the multi media software business via its Mindscape unit.

Excluding Mindscape, Pearson's operating profits were up 23 per cent.