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Highlights
- Media giant Daily Mail and General Trust PLC move a step closer to becoming privatised following the SPAC listing of online car retail firm Cazoo.
- The media giant’s owner Lord Rothermere had set certain conditions prior to his takeover, which included the successful listing of Cazoo.
UK-based media publishing giant Daily Mail and General Trust PLC (LON:DGMT) may be a step closer to becoming private entity following the successful listing of online car retailer Cazoo.
Cazoo listed on the NYSE, combining with Ajax, a special purpose acquisition company (SPAC) and raised up to US$ 1 billion, with the newly formed combined entity known as Cazoo Group Ltd. DGMT owns about 17 per cent of Cazoo’s shares, following which the media house received up to US$ 5 million in net cash.
SPACs have become an increasingly popular listing choice recently among companies as it allows them to directly list, merging with a publicly traded SPAC holding company without undertaking the longer route of an IPO listing.
Daily Mail’s (LON:DMGT) share price performance
(Image Source: EODHD/Others)
Daily Mail’s shares surged to a high of GBX 1,114.00 on 27 August following the news. The company’s market cap stood at £2,306.13 million, and its year-to-date return stands at around 50 per cent as of 27 August. The company has been listed on the London Stock Exchange since 11 November 1932.
Related Article: Why did Daily Mail & General Trust shares hit a 52-week high today?
Daily Mail’s (LON:DMGT) privatisation plans
DMGT’s chairman and majority shareholder Lord Rothermere had announced in July his plans to take the media house private, which also includes newspapers such as the Daily Mail, Mail on Sunday and Metro.
However, he had set certain pre-conditions before implementing his £810 million planned takeover. The conditions include the successful listing of Cazoo and also divestment of DMGT’s insurance business RMS. RMS had already sold its business to risk assessment firm Moody’s Corporation, worth up to £1,425 million on 5 August. However, the transaction is expected to be completed by mid-September.
And the last condition is the DMGT’s pension trustee negotiations, which will depend on the pension deficit size across three schemes.
Companies that choose to go private usually do so to undertake a major shift in its business strategy or to reduce their disclosure requirements.
Bottom Line
DMGT has been divesting its non-core businesses over the past few several years, including ed-tech firm Hobsons for US$ 410 million, real estate company Zoopla and others. Streamlining the business will thus enable the company to easily enhance its value ahead of its privatisation goals.
However, the industry does not expect any takeover news to come before September until all the conditions are met.
