By Muvija M and Paul Sandle
(Reuters) -The founding family and leading investor in the publisher of Britain's Daily Mail newspaper is considering taking the group private in a $1.1 billion deal as part of a break-up of the business.
The Daily Mail and General Trust (DMGT) said the Rothermeres, who own 28% of the company, are ready to make a cash offer to buy the group outright, provided it sells its RMS insurance risk business and that the listing of online car seller Cazoo, which it partially owns, goes ahead.
Shares in DMGT, which publishes the Daily Mail tabloid, The Mail on Sunday and MailOnline, climbed as much as 10% to their highest in more than two decades in early trading. They were up 3.3% at 1,074 pence at 1240 GMT.
The Daily Mail was first published in 1896 by the ancestors of current DMGT chairman Jonathan Harmsworth, the Viscount Rothermere.
The Mail has weathered the long-term decline in newspaper sales better than rivals, overtaking Rupert Murdoch's Sun to become the UK's top-selling newspaper last year, and wields political clout as the voice of conservative "middle England".
The group's website - MailOnline - is among the most visited English-language news sites globally thanks to its celebrity focused formula.
DMGT, which has been slimming down in the last few years to focus on its mainstay news business, said on Monday it was in talks to sell RMS in a deal that could complete before the end of September.
Without its interests in Cazoo and RMS - which offers risk-modeling for businesses - DMGT would comprise news publishing and its events and property information businesses.
DMGT said it intended to distribute the proceeds of a sale of RMS along with its cash and its stake in a listed Cazoo via a special dividend, with a cash element of about 610 pence.
The company's stake in Cazoo could be worth $1.35 billion after the flotation, expected in the current quarter.
Contingent on the transactions, the Rothermeres would be prepared to offer 251 pence for each DMGT share, DMGT said.
Analysts at Berenberg said the approximate value of the terms implied a value per share of 1,261 pence, a 21% premium on Friday's closing price.
"The premium doesn't represent a knock out offer, but given the Rothermere holding company already controls the group, there aren't really other alternatives, and versus the share price of DMGT earlier in the year, it's obviously very significant upside," they said.
"Its unlikely, therefore, that we will see a much more generous offer appear from elsewhere."
DMGT's liquidity has been constrained by its dual-share structure, with voting rights only granted to some stock, tightening the family's hold on the company.