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DMGT cuts ties with Euromoney

The media giant is proposing distributions to shareholders of nearly £900m
March 6, 2019

Sir Patrick Sergeant – then City editor of the Daily Mail – founded Euromoney's (ERM) flagship title in 1969. Half a century later, the Daily Mail and General Trust (DMGT) plans to relinquish its 49 per cent stake in the information and events group and return around £896m to DMGT’s investors in the process, constituting its entire shareholding in Euromoney and an extra £200m in cash. 

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This cutting of ties hasn’t come entirely out of the blue. DMGT had already reduced its stake in Euromoney from 67 per cent in 2016. And, noting media speculation, it said on 25 February 2019 that it was “reviewing options” regarding its remaining holding.

For DMGT’s chief executive, Paul Zwillenberg, the proposed distributions to holders of DMGT’s (non-voting) shares are “fully aligned with our strategic priorities of increasing the focus of our portfolio and maintaining financial flexibility, whilst at the same time improving the efficiency of our balance sheet”.

Investment vehicles tied to the Rothermere family, and DMGT chairman Lord Rothermere, will not participate to the same extent as other shareholders, not receiving Euromoney shares and limiting their receipt of the cash distribution. In turn, the stake in DMGT held by ‘Rothermere Affiliated Shareholders’ will rise from 24 per cent to 36 per cent – granting them greater control over the media empire.  

Broker Liberum says the impact of DMGT’s proposal “would seem to be a much cleaner structure that will benefit both DMGT and Euromoney shareholders”. The “slight negative” for DMGT is that the proportion of its profits from consumer media – a “more cyclical and structurally challenged” arena – will rise from around 35 per cent to over half of the group on a pro-forma 2018 results basis.  

DMGT confirmed that trading continues in line with management’s expectations. If the distributions proceed, the share of adjusted operating profits from joint ventures and associates would fall from at least £40m to around £15m in FY2019.

Euromoney’s chief executive, Andrew Rashbass, said the group supported DMGT's proposal, which would “result in a more diversified shareholder base”. Broker Numis notes that the improved free float could attract new US investors, while a greater index weighting might also draw in passive index funds.