Independent Newspapers has failed in an attempt to buy a small chain of newspapers in the Donegal and the North. It is understood Independent approached the group some weeks ago, but the offer was rejected.

The newspapers are owned by a family group and include the Derry People/Donegal News, Fermanagh Herald, Ulster Herald and Strabane Chronicle. The papers have a combined circulation in excess of 40,000 and the company which owns them, the North West of Ireland Printing and Publishing Company, made pre-tax profits of almost £500,000 sterling and after tax profits of £360,000 last year.

It is not known how much Independent was prepared to offer, but some sources put it at £5-£7 million.

Market sources believe Independent saw the move as a strategic one, heading off competition from the Mirror Group. In July the Mirror Group bought a string of newspapers in the North and in Donegal for £18.25 million sterling.

For Independent, acquiring a group of newspapers in the North would make sense as the company already has a very strong presence in the provincial newspaper sector in the Republic. It is understood that Independent believes it would be difficult to further increase its presence in the Republic without incurring scrutiny by the Competition Authority.

The North West of Ireland Printing and Publishing company's shareholders are predominantly the Lynch family. The company is understood to need investment in new presses. It currently has cash reserves of £862,000.

When contacted yesterday the company's managing director Mr Austin Lynch said the company was not being sold, nor could he comment on any approach from Independent Newspapers.

An Independent Newspapers spokesman said the company did not comment on speculation.