The papers have been signed, and little can prevent Montgomery from finalising the acquisition of Scandinavia's fifth largest media company. Still, it won't be an easy ride, and the latest addition to Mecom Europe might prove a troublesome child indeed.
Mecom agreed to buy Orkla Media for £647m, of which £93m will be a vendor loan note provided by Orkla. The loan is to be repaid in two years, and is subject to an interest rate 5 per cent above the market (LIBOR) rate. Orkla Media’s employees would much rather have preferred a Norwegian owner to a foreigner, and the fact that Orkla was willing to extend a loan to Mecom, rather than seek other solutions, has infuriated many.
Ready to go down fighting
Yesterday’s reactions showed that Orkla Media’s employees are far from ready to abandon their loud PR campaign against Mecom, despite admitting the battle of who would be their future owner has been lost. Though Montgomery went from being invoked as a tyrant to being described as a “nice piano-playing man from Northern Ireland” after he held his first press conference in Oslo, fears about Mecom’s financial strength are stronger than ever. Kjetil Haanes, Orkla Media’s main employee representative, summed up many of these fears when he told Norwegian media: “This has been a terribly sad day. A key Norwegian media company, which has existed for 23 years, is being sold to a tiny British company with money troubles. Mecom doesn’t even have enough money to buy Orkla Media – in which case they will not have the money to develop the company further.” Immediately after the deal was announced Haanes said he would seek independent advice on how to best negotiate redundancy packages.
Add to this great political dismay to see a huge chunk of Norway’s regional and local newspapers sold to a foreigner; a looming Danish newspaper war; the urgent need to boost digital operations and the inherent vulnerabilities in a business model as highly geared as Mecom’s… the challenges are plentiful...