Shares in publisher Daily Mail & General Trust (DMGT) have jumped over 7% to 918p after online car retailer Cazoo, in which it owns a 20% stake, announced plans for a $7 billion float in New York.

Cazoo will make its stock market debut in New York though a special-purpose acquisition company (Spac), after agreeing to a merger deal that values the company at $7 billion (£5 billion).

Cazoo is set to merge with Ajax I, led by US investor Dan Och. Upon closing of the proposed transaction, the combined company will be named Cazoo and be listed on the New York Stock Exchange under the new ticker symbol ‘CZOO’.

Spacs are ‘blank cheque’ companies that have become a popular way for companies to list and offer a cheaper, quicker way for a private company to join the stock market.

DAILY MAIL WINDFALL

When Cazoo completes its merger with the Spac, Daily Mail said it expects to receive around $1.35 billion (£1 billion) for its stake in cash and shares in the listed Cazoo business, having originally invested £117 million into the company.

DMGT said: ‘It is likely that DMGT will receive some cash proceeds on closing, but the amount will depend on a number of factors, including redemptions by AJAX shareholders, if any, as well as DMGT’s election and those of other shareholders with respect to receipt of cash consideration.’

As well as its portfolio of operating businesses including the Daily Mail, DMGT holds non-controlling stakes in other companies, usually start-ups where DMGT says it ‘sees the potential to invest and help develop them for significant value creation’.

PORTFOLIO COMPANIES

These include a 45% stake in hybrid estate agent Yopa, a 27% stake in Praedicat, which aims to improve underwriting and management of casualty risk, and a 24% stake in Excalibur, which operates the online discount business Wowcher.

DMGT’s CEO Paul Zwillenberg hailed Cazoo as an example of DMGT’s ‘ability to identify and support disruptive early-stage businesses led by entrepreneurial management teams’.

He added: ‘Our strategy gave us confidence in our portfolio and the financial flexibility to invest in Cazoo, including leading a funding round in March 2020 at a time of global uncertainty.’

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Issue Date: 29 Mar 2021