Possible Offer For Daily Mail and General Trust plc

Viscount Rothermere makes a bid for the voting shares of Daily Mail and General Trust plc (LON: DMGT)

Maynard Paton

Maynard has worked at the Fool since 1999. He ran the Qualiport online portfolio on the Fool from November 1999 to September 2005 and was lead adviser for the Champion Shares & Champion Shares PRO stock-picking services from September 2005 to June 2011, at which point he moved to become Deputy Editor of the UK Fool. Prior to joining the Fool, Maynard worked for a year as a Poll Tax clerk and then for six years at the local authority's IT department in the murky world of ICL mainframes and COBOL programming. He relocated to Kent to join a financial services firm's IT department and there discovered the joys of stock market investing. As well as keeping an eye on share prices and his local housing market, Maynard's interests include karting, martial arts and entertaining his young family.

Published 1 July, 2013 9:12 am BST

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The ordinary shares of Daily Mail & General Trust (LSE: DMGO) surged 83p, or 14%, to 668p during early trade this morning after Viscount Rothermere announced an agreed offer for a stake in the FTSE 100 company.

The media group, which publishes the Daily Mail newspaper, confirmed Viscount Rothermere would offer 112.5 non-voting ‘A’ shares of Daily Mail & General Trust (LSE: DMGT) for every 100 ordinary shares held by The Esmond Harmsworth 1998 Settlement.

The price of DMGT’s non-voting ‘A’ shares gained 7p to 777p during early trade, effectively valuing Viscount Rothermere’s offer for the ordinary shares at 874p.

DMGT is one of the few London-listed companies that continues to operate a dual-share structure. At the last count, the blue chip had 20 million ordinary shares and 394 million non-voting ‘A’ shares in circulation.

Today’s deal would take Viscount Rothermere’s ownership of the ordinary shares from 60% to 89%.

DMGT’s non-voting ‘A’ shares are generally more popular with investors, with greater liquidity and frequent price discount to the ordinary shares making up for the lack of any say within the AGM ballots.

However, the price of the non-voting ‘A’ shares has substantially outperformed the ordinary shares during 2013.

Indeed, the media group has seen its ‘A’ shares rally 28% since being spotlighted as the Motley Fool’s Top Growth Share For 2013.

The share-price performance has been in part helped by bumper interim results, which revealed underlying profits up 30%

City brokers expect DMGT to report current-year earnings of 51p per share and declare a dividend of 19.3p per share.

Those projections place the ‘A’ shares on a P/E of 15 and dividend yield of 2.5%, and place the ordinary shares on a P/E of 13 and dividend yield of 2.9%.

Of course, whether those ratings, today’s offer from Viscount Rothermere, as well as the wider outlook for the media sector, all combine to make either class of DMGT’s shares a ‘buy’ is something only you can decide.

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> Maynard does not own any share mentioned in this article.