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Lord Rothermere’s higher offer still undervalues Daily Mail publisher, says investor

Daily Mail DMGT Rothermere
Daily Mail DMGT Rothermere

Lord Rothermere's sweetened bid to take the publisher of the Daily Mail private has been rejected by a minority investor who said it still undervalued the company.

Majedie has urged shareholders to reject the final offer of £885m on the grounds that it remains a "significant discount" on the value lying within DMGT.

The asset manager, which owns 4.5pc stake, has called on the non-conflicted members of the DMGT board to be more transparent about the decisions behind Lord Rothermere's offer by publishing independent valuations of the companies he wants to privatise.

Chris Field, the lead manager for Majedie’s UK Income Fund, pointed to DMGT's investment in the buy-now-pay-later-app Zilch as an asset now worth four times as much compared to when the company invested earlier this year.

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"It is our opinion that this revised offer announced today represents a significant discount to our appraisal value of the residual DMGT businesses," he added.

"Our appraisal value is informed by comparative multiples for the residual businesses, the majority of which occupy leadership positions in their respective markets. It also recognises that balance sheet investments held at book value are materially undervalued.

"We have a duty to our clients to seek a reasonable offer for their shareholding in DMGT."

The response comes as Lord Rothermere increased his chances of pushing through a deal by lowering the threshold of shareholder approval from 90pc to 50pc.

It has put the Rothermere family on the brink of delisting the business it founded 125 years ago given 41.8pc of shareholders have already accepted his offer.

Investors have until 1pm on December 16 to accept the new 270p a share offer.

Lord Rothermere, who holds a 36pc stake, has already increased his offer once to 255p a share in a move that valued the consumer publishing business behind titles such as the Mail, the Mail on Sunday, the i, the Metro and MailOnline at £850m.

However, the offer was publicly rebuked by minority investors as "underwhelming" and "substantially below" a "fair and reasonable valuation".

J O Hambro Capital Management, which owns a 3.3pc stake in DMGT and advises on a further 2.6pc of shares, said the 255p price was "neither fair nor supportable" and questioned whether there had been a "lack of detail and rigour" around valuing the assets.

The concerns raised added to those raised by Majedie, which has a 4.6pc holding. The asset manager said the largest businesses in DMGT alone were worth more than double the 255p offer price.

A top 10 investor told The Telegraph there was a danger that it would "end up in a very small illiquid company with no voting rights" if it did not accept the offer.

Lord Rothermere’s attempt to take DMGT’s consumer business private is part of a complex deal with a series of pre-conditions that have now been cleared.

It involved selling the insurance risk business RMS, securing the New York listing of online used car seller Cazoo so it could distribute its 17pc stake to shareholders and pumping £412m into the firm’s three pensions funds.

It is part of a wider executive overhaul at the organisation, which led to the ousting of Geordie Greig as editor of the Daily Mail and elevating the Mail on Sunday editor, Ted Verity, to oversee both titles.

The shake-up has consolidated power around Martin Clarke, the publisher of DMG Media and architect of MailOnline's global expansion.

Meanwhile, the former Daily Mail editor Paul Dacre has returned to the publisher as editor-in-chief following his ill-fated attempt to become chair of the media regulator, Ofcom.

DMGT warned last month that it was eyeing job cuts to fight the highest print costs for a quarter of a century.