* Deal will be in cash and shares
* Trinity Mirror shares up 12 percent
* Targets 20 mln stg annual savings (Adds shares, industry context)
LONDON, Feb 9 (Reuters) - Daily Mirror publisher Trinity Mirror scooped up titles including the Daily Express, Daily Star and OK! magazine for 127 million pounds ($177 million) on Friday in the biggest shake up of Britain's cut-throat newspaper industry in decades.
The takeover by Britain's largest news publisher unites tabloids from opposite ends of the political spectrum, and with conflicting views on Brexit, to create a company better able to cope with readers and advertisers moving online.
"It's a challenging industry, that's why we need to come together," Trinity Chief Executive Simon Fox told Reuters.
"There is a lot of life left in print and there are a lot of opportunities in digital but no one is saying it's going to be easy," Fox said, adding he did not expect the deal to face major regulatory issues.
Trinity Mirror's stable already includes more than 260 national and regional titles including the Daily Record, the Manchester Evening News, the Liverpool Echo and Birmingham Mail.
Billionaire Express owner Richard Desmond, who made his fortune publishing adult titles such as the British edition of Penthouse, will get an 8.6 percent stake in Trinity and 107 million pounds in cash under the terms of the deal.
Fox said the editors of the individual titles would retain editorial control over their political output, with the Express free to pursue its support for Brexit and the Mirror able to criticize the government's handling of the EU departure.
"The Mirror is not going to go right wing, the Express is not going to go left," Fox said.
Trinity Mirror said it planned to save 20 million pounds in annual costs by 2020 by cutting back-office jobs and sharing editorial teams in sport and features.
Its shares jumped 12 percent on the announcement, which was accompanied by an upbeat trading statement showing that the company had paid down debt and was on track to beat forecasts.
Both the Daily Mirror and the Express have seen their circulation tumble in recent years, forcing them to slash costs and invest in their online sites to remain profitable.
While other media owners have sold out of newspapers in recent years, such as Pearson selling the Financial Times and Rupert Murdoch putting his newspapers in a separate company, Trinity Mirror has doubled down on the industry.
Fox, who took over the company in 2012 after running music retailer HMV, has stripped out costs, shared content across its many titles and bought smaller rivals.
He said the acquisition would be materially earnings enhancing in the first full year of ownership and give the larger group a more robust source of income based on circulation revenue rather than the more volatile advertising.
The combined group will have a digital audience of 234 million monthly unique browsers, excluding those on apps.
In areas such as sport, the new group will increase its coverage by assigning one reporter to cover a match for multiple titles, freeing up other reporters. ($1 = 0.7164 pounds) (Reporting by Kate Holton; editing by Sarah Young and Alexander Smith)