The owner of the Daily Mail newspaper has agreed to sell its insurance business for £1.4 billion, bolstering its controlling shareholder’s ambition to take the company private.
The Daily Mail and General Trust is to sell RMS, which helps insurers to estimate the risk of extreme weather events, to Moody’s, the American credit ratings agency. The price tag is higher than many analysts had expected, valuing the division at 38 times underlying earnings.
The sale comes less than a month after Lord Rothermere, 53, DMGT’s dominant investor, unveiled plans to take the publisher off the London Stock Exchange, where it has been quoted since 1932. Rothermere, great grandson of the Mail’s founder, has an economic interest of 36 per cent in Daily Mail and General Trust and owns all its voting stock.
The disposal of RMS completes the first step in Rothermere’s scheme to seize control of the family business. DMGT’s board said last month that it was minded to accept his proposal, but Rothermere must first reach an agreement with the company’s pension trustees. The offer also will hinge on the proposed American listing of Cazoo, the online used car retailer in which DMGT holds a 20 per cent stake, which is scheduled for this month.
The publisher acquired RMS, or Risk Management Solutions, in the late 1990s and has stepped up investment in the division in recent years. The business operates more than 400 risk models covering 120 countries and provides climate and natural disaster assessments for insurers.
DMGT will pay £210 million of the proceeds to RMS’s minority shareholders and staff and to satisfy tax bills and other expenses. It has earmarked a further £60 million for DMGT’s pension savers, but will need to pledge more to fill the actuarial deficit in the scheme.
After the deal is completed, DMGT will pay investors a special dividend of about 610p a share and will distribute the New York-listed Cazoo stock. It is set to crystalise a profit of nearly £1 billion from Cazoo, assuming that it floats as planned. Rothermere would then bid £810 million, or 251p a share, for the rump of DMGT, including its publishing assets and the smaller events and property information wings.
Paul Zwillenberg, 54, chief executive, described the sale as “another major milestone in DMGT’s transformation”. In recent years, he has sold its online education business Hobsons, energy data provider Genscape and its stake in Zoopla, the online property marketplace.
Shares in Daily Mail and General Trust closed up 1.7 per cent, or 18p, at £10.86 last night.
