Guardian owner cuts losses and sells
The owner of Britain's Guardian newspaper has agreed to sell its 50.1 per cent stake in cash-generative Trader Media Group to private equity firm Apax for around £600 million ($1.19 billion), the companies and sources said.
Terms were not disclosed, but two sources familiar with the matter told Reuters that the deal gives Trader Media Group, owner of the Auto Trader car sales website, an enterprise value of about £1.75 billion.
The loss-making Guardian made its own headlines with its reporting last year of leaks from former US spy agency contractor Edward Snowden.
Though Trader Media Group - with Britain's leading website for buying and selling new and used cars - helped to offset operating losses at GMG newspapers, GMG chief executive Andrew Miller said the proposed deal makes strategic sense as the company focuses on its digital and print journalism.
"On completion, the sale proceeds will strengthen our balance sheet and position us for further investment and growth in our core business," Miller said of the deal, which is subject to regulatory approval,
GMG, which includes the Guardian, the Observer and guardian.com, reported revenue from continuing operations of £207m in the year to March 31, 2013, and an overall operating loss of £47m, an improvement on the £63m recorded 12 months earlier.
Within those results, GMG received £38m from its stake in Trader Media, the company said.
"This deal will make GMG a very well-capitalised media organisation with the financial flexibility to navigate the rapidly changing media environment," Neil Berkett, chairman of the GMG board, said.
GMG said that its sole shareholder the Scott Trust, which was set up in 1936 to safeguard the liberal values of the newspaper, supported the deal.
The Guardian has also been known in recent years for breaking the story of phone hacking at Rupert Murdoch's now-defunct News of the World tabloid.
Apax bought a 49.9 per cent stake in Trader Media in 2007 in a deal that valued the company at £1.35b including debt.
Apax was advised by JPMorgan and GMG by Bank of America Merrill Lynch.