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UPDATE 2-Mecom takes control of Dutch business, shares rise
March 14, 2012 / 9:28 AM / 6 years ago

UPDATE 2-Mecom takes control of Dutch business, shares rise

* FY adj pretax profit 53.3 mln euros vs 57.3 mln euros

* Revenue fell 2 pct to 1.05 bln euros

* To pay final dividend of 9.9 euro cents

* Net debt reduced to 258.5 mln euros

* Shares rise 8 pct

March 14 - Mecom, which has been streamlining its business by selling units and cutting costs, acquired near total control of its Dutch regional newspaper unit that accounts for a bulk of the publisher’s profit.

The news sent shares of the company, hit hard by falling advertising sales and changing readership trends, up 8 percent at 175.75 pence on the London Stock Exchange.

Mecom acquired a 13.3 percent stake in the Koninklijke Wegener N.V. business from fund manager Governance for Owners, taking its holding in the unit to 99.7 percent.

The Wegener group, which includes the De Gelderlander daily and scores of door-to-door weekly freesheets, contributes 83 percent to Mecom’s operating profit.

As part of the agreement, Governance for Owners would receive a 7 percent stake in Mecom, making it one of the largest stakeholders in the company.

“Governance for Owners’ agreement to swap its minority stake in Wegener for 8.7 million Mecom shares cleans up the structure, takes out some cost and should be about 5 percent earnings per share enhancing in a full year,” analyst Simon Davies of Collins Stewart said in a note.

The company named Tom Toumazis as its new chief last year after British tabloid veteran David Montgomery quit due to a disagreement with shareholders.

In January, Toumazis launched a slew of measures, including cost cuts, asset reviews and paid access for online content, to temper the impact of falling advertising sales.

Analyst Patrick Yau of Peel Hunt said the new management team was drawing a line on the old regime, setting the company on a right footing. He added that the company’s strategic initiatives were a good start to that process.

Separately, the company posted a lower full-year profit, as advertising revenue deteriorated sharply in the second half of the year.

The group said it would focus on higher margin operations as it continued to expect a further decline in advertising revenue in 2012.

CEO Toumazis said he would continue to explore options in the freesheets business, particularly in Netherlands and decide on the fate of its Polish business in the first half of 2012.

The company recently terminated a contract with the publisher of the daily freesheet De Pers, disposed off its Norwegian media business and sold its majority stake in Presspublica in Poland.

January-December adjusted pretax profit fell to 53.3 million euros from 57.3 million euros last year. Revenue fell marginally to 1.05 billion euros.

Mecom said it would pay a final dividend of 9.9 euro cents, taking the total dividend to 15.4 euro cents.

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