Why did Daily Mail & General Trust shares hit a 52-week high today?

Summary

  • Shares of Daily Mail & General Trust surged a little more than 10% on Monday
  • The stock briefly slipped into the negative territory in the mid-morning session
  • The shareholders stand to gain as much as GBX 251 in cash for each share held

Shares of Daily Mail & General Trust (LON: DGMT), the London-headquartered media giant, surged a little more than 10% in the trade on Monday, 12 July, after the company announced the possible interest of Rothermere Continuation Ltd (RCL) buying an additional stake.

With a debt of approximately GBP230 million, estimated by DGMT, RCL has indicated an offer to acquire the entire issued and to be issued share capital of the company for a cash consideration of GBP810 million. RCL already owns a 30% stake in DGMT, the prospective deal could transfer the full ownership rights to the former.

According to DGMT, the company would seek delisting procedure and re-register itself as a private corporation if the said offer is declared unconditional at a later stage by RCL.

If the prospective deal gets an in-principle go-ahead from the shareholders and regulatory authorities, the shareholders of DGMT stand to gain as much as GBX 251 in cash for each share held.

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The stock briefly slipped into the negative territory in the mid-morning session after hitting a day’s high in the opening hour. Shares of Daily Mail & General Trust started 4% higher following the development in morning trades.

According to the data available with the London Stock Exchange,the stock of Daily Mail & General Trust rallied as much as 10.23%, registering a fresh 52-week high of GBX 1,146.45 from the previous close of 1,040 apiece.

Immensely high trading volumes were seen in the shares. The stock witnessed a trading volume of 1.4 million, translating into a total traded turnover of more than GBP12.14 million, up until 14:13 BST.

The discussions between the management and the holding company are underway. The board of directors of DGMT believes that the shareholders of the company would realise a premium valuation if the proposed sale of stake proceeds ahead. However, there is no certainty that the transaction will be completed according to the terms disclosed so far.

Subsequent to the successful agreement on the terms, the transaction between DGMT and RCL is likely to take place within the third quarter of the present calendar year.

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The eligible shareholders of DGMT are likely to receive a special dividend, conditionally dependent on the offer proceedings. The company intends to declare a single distribution comprising non-cash assets, Cazoo shares (the special dividend), and cash equivalent to GBX 251 to all the entitled members on the record date. 

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