Springer rules out hostile Mirror bid

AXEL SPRINGER, Germany's biggest newspaper group, has ruled out a hostile bid for Mirror Group, the tabloid newspaper publisher, and is expected instead to seek boardroom support for an agreed offer valuing the company at more than pounds 1bn.

Both sides played down reports that negotiations about a takeover had already begun, although it was confirmed that Gus Fischer, the Springer chairman, spoke to Mirror Group chief executive David Montgomery over the weekend at his Italian holiday villa.

Mr Montgomery is due to return to London early this week in readiness to hold talks with Springer. A Mirror Group spokesman said: "We have had no approach and there has been no offer. If one is made it would of course be looked at but it would have to be one which reflected the brand strengths and market position of the business."

Springer confirmed on Friday that it was considering a bid for Mirror, which owns the Mirror, Sunday Mirror and People as well as L!VE TV and Midland Independent Newspapers, publishers of the Birmingham Post.

The statement was flushed out of the German group after it had appeared to rule out any interest in buying Mirror. Analysts said there was every possibility that it would prompt wider interest in Mirror, signalling that the group had effectively been put into play.

It has now emerged that Mr Montgomery and Mr Fischer met several weeks ago over lunch, during which the subject of a possible combination was aired.

One source close to the Springer camp said: "David has been having lunch with practically everybody trying to see whether there is a meeting of minds. In Springer he has found a company which has said, if you would like to do a deal so would we."

A Mirror Group takeover would provide no opportunities for cost-cutting and would yield few savings in purchasing for Springer. But the German group sees it as an ideal platform to expand and an opportunity to use its resources and management skills to arrest the decline of Mirror's "red-top" titles.

Springer publishes the German tabloid Bild, one of the few mass circulation papers in Europe which is increasing its circulation - a success put down to its enormously strong franchise and strategy of regionalising its coverage with large numbers of local stories.

The German group is being advised by Arthur Andersen, the accountants, but is expected to take on a London investment bank adviser this week.

Analysts suggest a price of at least 260p would be necessary in order to obtain Mirror's agreement, although there were suggestions over the weekend that Mr Montgomery would seek a price nearer to 300p.

The Mirror Group spokesman denied that Mr Fischer and Mr Montgomery had talked about a possible bid when they spoke over the weekend, saying that the call had been about a piece of "tittle tattle" that Mr Fischer had picked up about Mr Montgomery.

He also played down suggestions that Mirror was on full bid alert. "The wicket was taking a lot of spin over the weekend," he added.

Meanwhile speculation is mounting that Mirror Group will appoint the City financier and former chairman of Charterhouse Bank, Victor Blank, as its next chairman in succession to Sir Robert Clarke. The group refused to say who had been approached for the job but said it hoped to make an announcement in the next two to three weeks.