UPDATE 2-Belgium's De Persgroep to buy Mecom Group for 196 mln stg

Mon Jun 30, 2014 5:56am EDT

* Belgium's De Persgroep to buy Mecom for about 196 mln stg

* Deal at 35 pct premium to Friday's closing price of 115 pence

* Shares jump as much as 34 pct (Adds details, background, analyst comment; updates share price)

By Aastha Agnihotri

June 30 (Reuters) - Newspaper publisher Mecom Group Plc , battling steep declines in advertising revenue, is selling itself to Belgian media group De Persgroep NV for 196 million pounds ($334 million).

Mecom shareholders will receive 155 pence per share in cash, the company said in a statement, a 35 percent premium to the stock's closing price on Friday. The company's shares jumped to almost match the offer price.

De Persgroep NV was not immediately available for comment.

Mecom, founded by veteran British newspaper executive David Montgomery, publishes regional newspapers such as De Gelderlander and De Stentor in the Netherlands and Berlingske and BT in Denmark.

Under Montgomery, Mecom bought several assets and piled up debt, only to sell them later to repay lenders. Montgomery was forced out as chief executive by disgruntled shareholders in 2011. (bit.ly/1q8BFW9)

The company sold its Polish business last March and has been cutting costs to stem declining advertising revenue in the Netherlands and Denmark.

"The transaction marks the successful culmination of the strategic refocusing of the Mecom group over the past two years," said Mecom Chairman Rory Macnamara.

The company said in April that Dutch advertising revenue fell 20 percent in the first quarter, while advertising revenue in Denmark fell 38 percent.

"Strategically I can see why the deal makes sense and its 35 percent premium to Friday's close on the cash offer so I can see why its attractive to existing shareholders so all in looks pretty sensible," analyst Gareth Davies of Numis Securities told Reuters.

De Persgroep, led by Christian Van Thillo - a member of the Thillo family - said the deal would be funded through a combination of existing cash and a new debt facility provided by BNP Paribas Fortis S.A./N.V.

The company said it would conduct a detailed strategic and operational review of Mecom's business and close its London head office.

Rothschild and BNP Paribas advised De Persgroep on the deal, while Gleacher Shacklock and Canaccord Genuity were the advisers to Mecom.

Mecom shares touched a high of 153.5 pence, making them the top percentage gainer on the London Stock Exchange, before easing back a little to 152.03 pence.

The shares had been as high as 6,784 pence in July 2007 before the economic crisis. ($1 = 0.5877 British Pounds) (Additional reporting by Robert-Jan Bartunek; Editing by Gopakumar Warrier and Rodney Joyce)

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