The owner of The Scotsman and Yorkshire Post, National World, is considering a takeover of larger rival Reach, the parent company of the Daily Record, Mirror and Express titles and hundreds of local newspapers.

National World, run by the former Mirror Group boss and News of the World editor David Montgomery, issued a statement after the London Stock Exchange closed yesterday stating it was “at the early stages of exploring a possible offer for the entire issued and to be issued share capital of Reach.”

Shares in Reach rose 5.76% or 5.75p higher ahead of the announcement. However, they were up today by just 2p (1.93%) to 105.55p, suggesting there was little expectation of an offer, or that it would be pitched at a small premium. The latest price values the company at £334.07m.

National World shares dipped 0.50p (2.38%) to 20.5p, valuing the business at £53.18m.

In last night’s statement National World said there has been no contact with the Reach board.

Montgomery’s company reported revenue of £43.5m for the six months to the end of July against revenues at Reach of £297m.

A Reach spokesperson said: “The board of Reach notes the announcement by National World that it is considering a possible offer for the entire issued and to be issued share capital of the company. The board of Reach confirms that it has not received an approach from National World.”

Mr Montgomery, chair of National World, has declared that his company’s strategy is to grow by acquisition. He sold his previous local newspaper group Local World, a collection of about 100 local newspapers, to Reach in 2015 for £220m.

In a 2020 deal with the administrator of Johnson Press he paid just £10 million for what had been renamed JPI Media, the owner of local and regional papers including the Edinburgh-based Scotsman and Evening News, Falkirk Herald, Sheffield Star, Portsmouth News and the Sunderland Echo.

Earlier this year, he lost out to Newsquest in a bid for Archant that owns titles including the Eastern Daily Press.

Shares in Reach are down two-thirds over the past year but are up by a third in recent weeks amid speculation that it could be a bid target.

Under Takeover Panel rules, National World has until 5pm on 1 December to make a firm offer.

Sources say US media giant Gannett, whose subsidiary Newsquest owns The Herald, could also be interested in Reach, formerly known as Trinity Mirror.