The British regional newspaper group, Johnston Press, has become one of the largest newspaper groups in Ireland following two takeover deals worth more than €230 million. Emmet Oliver reports.
Johnston, the fourth-largest UK regional group, has purchased the Leinster Leader group for a cash price of €138.6 million and Local Press Limited for €95 million. Both deals are being done on a debt-free basis. Following the purchases, Johnston will own 18 titles north and south. In June it acquired six titles from Scottish Radio Holdings (SRH).
With 24 titles, Johnston becomes one of the largest publishers in Ireland. The company's chief executive, Tim Bowdler, said yesterday that it was interested in purchasing further assets in Ireland, mainly based on the strength of the economy.
The Leinster Leader was advised by PricewaterhouseCoopers Corporate Finance and Eugene F Collins, solicitors. Merrion Capital advised Johnston Press on the transaction.
The decision to sell the Leinster Leader group to Johnston comes after a sales process involving several large media groups and private equity houses.
Among the other companies believed to have made bids were Dunfermline Press, Independent News and Media, The Irish Times Ltd, Exponent Private Equity and 3i, another private equity group.
The Leinster Leader Group is a privately owned company with 27 shareholders. A number of these shareholders stand to make large gains from the sale. The two largest shareholders are believed to be women with a long association with the provincial newspaper group - Hester Smallbone from the UK and Elizabeth O'Kelly from Co Laois.
The two women have stakes of about 22 per cent each in the company. Based on this, they each stand to gain about €30 million. It is understood that the women have both owned the shares for several decades and any investment made in the company originally is likely to have been well below yesterday's price.
Other beneficiaries include well-known accountant John McStay, who specialises in liquidations and receiverships. He stands to gain more than €8 million, while solicitor Anthony Collins, with a 10 per cent stake, stands to gain about €13.8 million.
There was some surprise at the scale of the prices paid for the Leinster Leader Group and Local Press businesses yesterday.
Morgan Stanley said the deals looked "very expensive" and that Johnston would find it difficult to complete further acquisitions without fresh finance.
According to Johnston, the Leinster Leader posted turnover of €21.1 million for the year ended August 31st. Based on this, Johnston is paying almost 6.6 times revenues. The Leinster Leader group posted earnings before interest, tax, depreciation and amortisation (Ebitda) in this period of €8 million, making the purchase price over 17 times Ebitda.
This is significantly higher than most similar media deals concluded in recent years, but Mr Bowdler rejected the assertion that the price was inflated.
Leinster Leader group, which includes: Leinster Leader, Leinster Express, Offaly Express, Dundalk Democrat, Limerick Leader, Tallaght Echo
Local Press Group, which includes: Derry Journal, Donegal Democrat, Belfast Newsletter, Farming Life, Foyle News, The Sunday Journal, Letterkenny Listener, Belfast News, City News (Derry)
Other assets: Kilkenny People, Leitrim Observer, Tipperary Star, Longford Leader, The Nationalist and Munster Advertiser
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