(Alliance News) - Daily Mail & General Trust PLC on Thursday said it has struck a deal to sell its RMS insurance risk unit to Moody's Corp, taking the UK media company one step closer to going private.
The New York-based credit ratings agency will pay GBP1.43 billion for RMS, which generated GBP242 million of revenue in the year ended March 31.
The London-headquartered publisher, which owns the Daily Mail newspaper, said the sale is a "major milestone".
"It is the culmination of our strategy of investment in businesses combined with active portfolio management. Organic investment in RMS's software, data, data analytics, models and applications has created substantial shareholder value, particularly over the last few years as the team has delivered the accelerated product development programme," Chief Executive Paul Zwillenberg said.
DMGT back in July said it was in talks to sell the division, following "enquiries from third parties".
The sale price is in line with its expectations at the time of its announcement in July. Also at that time, the company said it would return the sale proceeds as a 610 pence per share special dividend.
The disposal meets one of the pre-conditions of a takeover bid by DMGT's controlling shareholder Lord Rothermere.
In July, the company said Rothermere Continuation Ltd was prepared to make a 251p per share cash offer to take the remainder of DMGT private. This would give an enterprise value to the remainder of DMGT of GBP810 million, the company said.
"As a result of the sale of RMS, DMGT expects to incur aggregate costs of approximately GBP210 million in respect of RMS minority shareholders, incentive plans for RMS employees, tax charges and disposal fees. In addition, as the sale will involve RMS's retirement as a guarantor in respect of one of DMGT's pension schemes, a payment currently estimated to be approximately GBP60 million will be made into an escrow account in respect of that scheme," the company added.
Shares in the company were 1.5% higher at 1,083.83 pence each in London on Thursday afternoon.
By Eric Cunha; ericcunha@alliancenews.com
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