Ex-Mirror chief Montgomery behind Express and OK! deal plot

David Montgomery, the former News of the World editor, is behind an audacious plot to absorb the Daily Express and OK! magazine into a new media ownership vehicle.

Sky News has learnt that the veteran tycoon is hatching plans to acquire Northern & Shell's publishing arm from Richard Desmond, the current proprietor of the Express (Frankfurt: 02Z.F - news) and Daily Star titles.

Mr Montgomery, who has brought a string of media companies to the London stock market with varying degrees of success, is also talking to a group of financial investors including Towerbrook Capital Partners, a private equity firm, about backing the new venture.

Mr Montgomery himself would also own a sizeable stake, according to people briefed on the plans.

Trinity Mirror (Frankfurt: 885738 - news) , which acquired the Local World regional newspaper business created by Mr Montgomery two years ago, would also own a minority stake in the newly formed company.

If completed, it would cap a remarkable comeback for Mr Montgomery to the UK's national newspaper scene following his departure from the Mirror Group in the late 1990s.

He subsequently established Mecom Group, which owned an array of local newspapers in Scandinavia and elsewhere in Europe, but departed in 2010 after a bust-up with shareholders.

A report on Bloomberg on Monday night had suggested that Trinity (HKSE: 0891-OL.HK - news) was planning to acquire Mr Desmond's newspapers outright, but sources said a more likely outcome was that the ownership of Trinity Mirror's national newspaper titles would remain separate from the Express and Star.

In a statement issued to the London Stock Exchange (Other OTC: LDNXF - news) on Tuesday, Trinity Mirror said it was "at an early stage of discussions towards taking a minority interest in a new company comprising certain of Northern & Shell's assets".

It added that "no offer has been made and there is no certainty that any agreement will be reached".

An insider said that Artefact Group, an investment fund associated with Michael Ashcroft, the Conservative donor and former party treasurer, had also been approached about investing in the new company after previously being a shareholder in Local World.

The discussions with Towerbrook, a former owner of Jimmy Choo (LSE: CHOO.L - news) , are tentative, and Mr Montgomery is also talking to other private equity groups.

If a deal can be concluded, it would mark Mr Desmond's likely exit from Britain's newspaper industry nearly 17 years after he swooped on the Express and Star titles in a deal which aroused political opposition and criticism from journalists.

He has since extracted hundreds of millions of pounds from the business, replicating his financially successful operating model during a brief period of owning the terrestrial broadcaster Channel 5.

Mr Desmond has considered selling his publishing assets on several previous occasions, suggesting that a decision to offload them this time is far from a formality.

Under Mr Montgomery's plans, the new company and Trinity Mirror would be able to generate substantial cost savings by combining their back office operations at a time of continuing cost pressures across the industry.

The latest talks mark the second time in the space of two years that Trinity Mirror's chief executive, Simon Fox, has flirted with the idea of acquiring a stake in the Northern & Shell publishing assets.

Mr Fox launched a new national paid-for title, The New Day, last year, but scrapped it after just nine weeks after poor sales.

Trinity Mirror, Towerbrook and Mr Montgomery declined to comment on Tuesday.