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Possible Offer For Daily Mail and General Trust plc

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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.

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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.

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