The sale of Orkla Media, to British media group Mecom, was finalised on Tuesday morning. The sale includes the Berlingske Officin which owns one of Denmark's largest daily newspapers, Berlingske Tidende.
The original deal called for Mecom founder David Montgomery to raise funds that would guarantee 70 to 80 percent of the NOK 7 billion purchase price before a contract could be signed. Negotiations hit a snag earlier in July when Mecom announced it was short of almost half the funds for the deal threatening a collapse of the tentative agreement.
Now with a loan from Orkla, Mecom will be financing the acquisition through a combination of newly issued equity and debt capital. Mecom will pay DKK 5.2 billion in cash, DKK 797 million in shares and has agreed to a vendor loan note of some DKK 1 billion, according to a press release from the Orkla Group.
'The Orkla Media acquisition has taken a major step towards the implementation of Mecom's strategy to build a pan-European newspaper publishing business,' Montgomery said in a statement.
The loan note, if not repaid within two years, will partly convert to Mecom shares. The deal gives the Orkla Group, which has business activities ranging from frozen pizzas to aluminium production, nearly 20 percent of Mecom before taking into account any conversion of the vendor loan note.
'We are going to be an investor with a financial approach,' Orkla Chief Executive Dag Opedal told Reuters. 'We like the industrial strategy of Mecom and will be a major investor.'
Carine Johansen, an employee-voted member of the board of directors of Orkla Media, told the Norwegian news outlet Næringsliv 24, that it was a sad day for those who had opposed the sale.
Johansen said she was disappointed over Orkla's decision to help finance the sale to Mecom.
'It's clear that there is a lot of prestige in the deal if Orkla is willing to lend so much money to the buyer,' she said.
The Berlingske Officin is the parent company to 14 daily newspapers and some 50 local publications across Denmark. The Danish division employs some 2863 people and has a net turnover of DKK 3.5 billion.
There have been concerns from the employee union that the takeover by Mecom will result in several rounds of firings, as a sharp cost-cutting measure.
The agreement is expected to be finalised around the end of September.