Shares in two major newspaper groups surged today as reports said that barriers to their planned merger, which was opposed by the sections of the ruling party, had been cleared.

The share price of Utusan Melayu Bhd rose 37 sen, or 25 percent, to RM1.84 and New Straits Times Press Bhd (NSTP) rose 27 sen, or 11 percent, to RM2.74 as it appeared the plan to create the nation's biggest press group would go ahead.

The ruling Umno is the majority owner of Utusan Melayu, whose flagship Malay-language daily, Utusan Malaysia , competes with the NSTP's Berita Harian .

Utusan Malaysia has for decades promoted the concerns of the country's majority ethnic Malays, and Umno members are reportedly opposed changing its identity.

The NSTP, which also publishes the influential English daily, the New Straits Times , is controlled by the country's largest media conglomerate, Media Prima.

Media Prima owns a slew of media-related businesses, including all of Malaysia's private free-to-air channels and two radio networks, which rarely stray from the government line. Umno has indirect ownership in Media Prima too.

Advantage to Utusan

The official Bernama news agency said that under a new merger plan designed to address the concerns, Utusan's executive director Nasir Ali would be appointed group chief executive officer of the merged entity.

It quoted sources familiar with the deal as saying that under the plan, a new frame work would be unveiled by as early as next week and that the deal would be completed by year-end.

"Under the previous deal, NSTP would have bought Utusan in a cash deal, but under the current framework, Utusan will be injected into NSTP, via a reverse takeover deal," it quoted a source as saying.

Under the new framework, a new company would take over both Utusan and NSTP, with the current shareholders of Utusan to be controlling stakeholders in the new merged entity.

Under the previous proposed framework, Media Prima would have been the parent of the merged entity, it said.

Shares in Utusan and NSTP were suspended last Friday ahead of an expected announcement on the merger on Monday.

But instead of news on the deal, both companies said they were still in talks, which saw share prices plunging on resumption of trade Tuesday.

Activists have criticised the proposed merger, saying the move could see Umno directly controlling a large slab of the country's media outlets while concentrating media ownership in a few hands.