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Why is Tindle buying yet another stake in Johnston Press?

I can’t fathom what Ray Tindle is up to in acquiring such a large slice of the ailing Johnston Press.

His latest foray into the market means that he now owns 6.36% of Johnston, making him the company’s third largest shareholder.

He has added a further 2% to the 4.36% stake he bought last month.

Only two shareholders now own more of Johnston than Tindle – Malaysian billionaire Ananda Krishnan’s PanOcean Management with 20% and an investment company, Orbis Holdings, with 10.7%.

Tindle told The Times he isn’t planning a takeover bid, explaining that his investment reflected his belief that the market is undervaluing Johnston.

Its share price has been below 5p for several weeks, giving the company a market capitalisation of just over £30m

Tindle is quoted as saying: “My opinion is that newspapers are undervalued at the moment. I know that people out in the sticks still stand by their local papers.”

As for Johnston, he said: “They have a lot of papers, good papers… A small upturn in the economy would put the business ‘back on the straight and narrow’. They are undervalued, so I decided to buy.”

Johnston Press publishes more than 200 daily and weekly titles across Britain, including The Scotsman, the Yorkshire Post and The News in Portsmouth.

Tindle, the counter-intuitive 84-year-old head of a family business, publishes 220 weekly titles and champions ultra-local journalism.

What had made Tindle stand out from the crowd down the years has been his willingness to take on small-circulation papers and accept small profits. He has previously avoided getting involved in corporate newspaper businesses.

Analysts I’ve spoken to appear baffled by his Johnston purchase. Its high level of debt, a consequence of borrowings during a long phase of acquisition during the boom years, will surely inhibit recovery.

But Lorna Tilbian, a media analyst at Numis, does see a positive side to his punt: “I guess Sir Ray is looking at the assets and not the gearing,” she said.

Sources: The Times/HoldTheFrontPage/The Guardian © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds