As a premise to the kind of consolidation that other countries in Europe are likely to be advocating in the forthcoming months and years, the second and third largest newspaper groups, by revenue, in Norway have come together. Debt ridden Mecom sold their Edda business to A-Pressen for a value of NK 1.725bn, around £1.5m, in a deal that had been largely predicted in the week leading up to it.
Mecom were classed as the second biggest group by revenue and circulation in the Norwegian newpaper market and are listed in London, whilst A-Pressen, ranked third, is owned by the telecommunications company Telenor and several trade unions. Last summer Mecom appointed Tom Toumazis as the CE and he has said of the sale that in will improve the balance sheet materially.
He also said that the cash input would allow them to consider, in due course and subject to further refinancing, an enhancement to the cash returns that the company paid to shareholders, as well as focussing on their strategy for the future and also to invest further to improve the profitability of the remainder of the group.
Mecom released a statement saying that the valuation at which the deal was struck represented 7.2 times the projected earnings for 2011 before tax, interest, amortisation and depreciation, and it added that the amortisation was a premium which added to the value of the business as a whole.
Both companies have pointed out, however, that the deal is still subject to the Norwegian competitions authority’s approval. Edda Media encompasses 36 local Norwegian newspapers that include Haugesund Avis and Drammens Tidende. In the past year, Edda have had a turnover of NK2.1bn, while their operation profit was NK 149m.
As well as local and regional newspapers, A-Pressen own several radio and TV channels, and as an analyst from Cheuvreux. Richard Hubron points out, the new group will have a combined share of 28% of the newspaper market by circulation.