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Publishing

UPDATE 1-Mecom has unsolicited bid for Edda Media - source

(Adds analyst quotes; updates share price)

LONDON, July 25 (Reuters) - European newspaper publisher Mecom MEC.L has received an unsolicited bid of about 375 million pounds ($744 million) for its Norwegian division, Edda Media, a source familiar with the situation said on Friday.

The source said the bid had not come from Norwegian media group A-Pressen, but did not say who the would-be buyer was.

The Financial Times reported earlier that Mecom had been approached with an offer, sending its shares up as much as 31 percent to a five-week high 25.25 pence before they cooled off to 22.5 -- still up 18.2 percent -- by 1049 GMT.

A spokeswoman for Mecom declined to comment but said it considered any offer on its merits.

UK-based Mecom, which is headed by former Mirror Group Chief Executive David Montgomery, bought Edda Media in 2006 for 7.5 billion Norwegian crowns ($1.45 billion).

Edda is the third-biggest media group in Norway, with 13 percent of the regional newspaper market, according to Mecom. It also operates 60 websites and three printing plants, and is one of Mecom’s fastest-growing businesses.

Edda’s 2007 sales were 226 million pounds, or 17 percent of Mecom’s total sales. Earnings before interest, tax, depreciation and amortisation (EBITDA) were 36 million pounds.

Separately, Norwegian business daily Dagens Naeringsliv said Mecom wanted 4.5 billion Norwegian crowns for Edda Media, consisting of 3 billion crowns in cash and the assumption of 1.5 billion crowns in debt. The paper did not name its sources.

Mecom’s net debt was 524 million pounds at end-2007.

The paper said that interested Norwegian parties considered 4.5 billion crowns “entirely unrealistic” and “altogether too high”. The interested parties in Norway are reported to include Berner Gruppen and directory services firm Opplysningen.

Kaupthing analyst Henrik Schultz said that 4.5 billion crowns would be a very high price.

“That sounds very, very rich to me,” Schultz said. “That is the kind of valuation we saw at the beginning of 2007 when media assets were priced very highly.”

Schultz said that 3.5 billion crowns would be more realistic. “Not a stock market valuation, because that would be lower, but I see that as an industrial valuation,” he said.

Schultz said that in the short term it would make sense for Mecom to sell assets and reduce debt because the group’s valuation is weighed down by debt. “But in a long-term strategic point of view, I’m not sure it makes sense,” he added. (Reporting by Georgina Prodhan, additional reporting by John Acher in Oslo, editing by Will Waterman, Paul Bolding)

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