UK financial purchasers are continuing to pip trade bidders to the post for major corporate disposals. The latest instance is Candover’s GBP360 million (ecu 552 million) acquisition of UPN, United News and Media’s newspaper interests in the North of England. This sale completed United’s withdrawal from the UK regional newspaper market.
Candover beat off competition from Trinity International, widely tipped as the obvious trade buyer for UPN and, according to press reports, from rival private equity bidder CVC Capital Partners. Advent International had earlier been reported to be preparing an MBI bid for the titles. The UPN deal is Candover’s second foray into the regional newspapers sector, following the 1991 buyout of Midland Independent Newspapers.
UPN, whose flagship titles are The Yorkshire Post, The Yorkshire Evening Post, The Star, The Lancashire Evening Post and the Wigan Evening Post, has a stable of 44 titles including dailies, weekly paid and weekly free titles. Together, these generated operating profits of GBP27.2 million on turnover of GBP140 million last year.
Candover provided GBP55 million of the GBP111 million total equity funding through its quoted investment trust and its GBP850 million 1997 fund, and is the largest single shareholder in UPN. The balance was provided by investment affiliates of Goldman Sachs International, together with listed Dutch investment group Alpinvest. Goldman Sachs is structuring and underwriting a debt package comprising a high-yield issue and senior debt facilities. Further details of the projected high-yield note had not been announced at press time.
The acquisition consideration for UPN represented a higher than average multiple of historic sales for a regional newspaper group, and the new owners plan substantial IT investment. Director Colin Buffin said Candover felt the price was justified by the quality of the UPN business and added: “Our objective will be to increase efficiency, revenues and circulation with a view to listing in three to five years”. Colin Buffin is joining the UPN board along with Julian Day, a former director of Midland Independent Newspapers.
UPN was the second deal for the Candover 1997 Fund, following the GBP55 million MBO of Fairey Hydraulics in January. Candover reports that 10% of the fund has now been drawn down.