Exclusive: firm becomes frontrunner to seal deal ahead of Mirror owner, say sources
Newsquest has gatecrashed the Daily Mirror owner’s attempt to buy JPI Media, which owns titles including the Scotsman and the Yorkshire Post, with an offer to create a UK regional newspaper powerhouse, The Guardian reports.
Three sources said Newsquest, the UK’s second-biggest regional newspaper group, which publishes 200 titles including the Argus, in Brighton, and Glasgow’s Evening Times, was considered the frontrunner to seal a deal for JPI’s extensive regional newspaper portfolio.
The publicly listed Reach, which owns national and regional titles including the Mirror, the Daily Express and the Manchester Evening News, is the only bidder to publicly admit it is in talks with JPI, formerly Johnston Press, which collapsed last year and re-emerged under new ownership as JPI. Reach had been considered to be the frontrunner to seal a deal.
The sources said Reach was still involved in the process, having tabled a bid thought to be valued at about £50m, but that Newsquest was considered the preferred bidder, having tabled a more substantial offer.
Newsquest looked to buy JPI’s regional portfolio last year – but not national newspaper the i – when the publisher launched an 11th-hour attempt to sell itself and crown jewel assets to try to pay debts of more than £220m.
At the time, Newsquest made a cash offer valuing the regional business at between £96m and £120m, with no pension deficit obligation. JPI rejected all the offers made for its assets and instead chose to enter administration, a day later agreeing a rescue and restructuring plan tabled by its biggest lenders.
When JPI’s owners moved to put the business up for sale again this summer, Newsquest once again became involved in the auction process. However, the takeover of Newsquest’s US parent, Gannett, the owner of USA Today, by GateHouse Media put a temporary hold on moving forward with a formal bid.
While the takeover of JPI would create a regional newspaper powerhouse, Newsquest will face a competition investigation if it manages to complete a deal.
Scotland poses a significant potential issue as Newsquest owns titles including the Herald, the Evening Times and the National, while JPI owns a portfolio including the Scotsman, Scotland on Sunday and the Edinburgh Evening News.
It is understood Newsquest would seek to operate the Scotsman portfolio in a “hold separate” agreement, with an independent management team to run the business until regulatory scrutiny was complete.
Reach did this with the Daily Express, the Sunday Express, the Daily Star and the Daily Star Sunday after acquiring the Northern & Shell business from Richard Desmond in a £200m deal last year.
In August, Reach replaced its chief executive, Simon Fox, with the former Ladbrokes Coral chief and News UK executive Jim Mullen.
The Guardian revealed in September that Daily Mail & General Trust, the owner of the Daily Mail, had entered exclusive talks to buy the i newspaper from JPI for about £50m.