Exclusive: Guardian Drives Auto Trader Sale
The publisher of The Guardian newspaper is in talks to sell its stake in Trader Media Group (TMG), one of Britain's biggest classified car advertising businesses, Sky News can reveal.
I understand that Guardian Media Group (GMG) has in recent weeks begun tentative discussions to sell its 50% stake in Trader Media Group (TMG) to Apax Partners, the joint owner of the business.
If it proceeds with a sale to Apax, GMG is expected to deploy the proceeds, which will run into hundreds of millions of pounds, to shield its newspapers from the deepening financial pressures afflicting the industry.
A sale by GMG to Apax, one of Europe's largest private equity groups, is only one of the options being considered by the two parties. Last year, the pair shared a £200m payout from a special dividend at TMG, and a similar refinancing could follow rather than a sale, although that is a less likely outcome, according to bankers.
Under the shareholder agreement struck between Apax and GMG in 2007, either partner has the right to buy out the other if the other wishes to sell its stake.
GMG's exploration of a sale of its stake in TMG reflects a sense within the company that it should not continue to have half of the group's value locked up in a non-core asset such as TMG.
Andrew Miller, who replaced Carolyn McCall as GMG's chief executive when she left to join easyJet, is keen to wrap up the sale talks with Apax as quickly as possible, insiders say.
GMG's sole shareholder is The Scott Trust, which was created in 1936 to safeguard the journalistic freedom of The Guardian (although not its sister paper, The Observer).
The talks between Apax and TMG come as the classifieds publisher continues to search for a new chief executive. In September, John King, TMG's chief executive, stepped down and was replaced on an interim basis by Zillah Byng-Maddick.
Apax acquired a 49.7% stake in TMG in 2007 in a deal which valued the company at more than £1.3bn. It is unclear how much the latest talks are likely to value TMG at, although industry sources speculated that the GMG stake would be worth in the region of between £500m and £600m.
People close to GMG said today that the organisation was under no financial pressure to sell and would not agree a deal with Apax unless the buyout firm met its valuation for the TMG shareholding.
Auto Trader's publisher has performed well and has made the transition from print to digital products more effectively than many of its peers elsewhere in the classified advertising business. In its results to the end of April this year, TMG increased digital revenues by 11% to £202m, with the average number of vehicles listed monthly on its site up 4%.
Guardian News and Media lost £44m in the last financial year, which Mr Miller said should mark a nadir for the newspaper publisher's finances.
Earlier this year, GMG agreed to sell its radio interests to Global Radio Group, the owner of the Capital and Heart commercial networks. It also owns a stake in Top Right Group, the media company formerly called Emap.
Apax and GMG both declined to comment.