Sir Anthony O'Reilly's Independent News & Media has made a A$3.8 billion (€2.29 billion) approach with private equity group Providence to take private its 40 per cent-owned Australian subsidiary, APN.
The joint approach for APN is priced at $6.02 per share, a 9.65 per cent premium on its closing price yesterday on the Australian stock exchange. Providence is lead partner with Independent in a consortium which also includes other capital partners. They plan a highly-leveraged buy-out.
Independent is the largest shareholder in APN, whose remaining stock is held on a free float on the Australian market. That position greatly increases its chances of success with the buy-out proposal.
A spokesman for Independent declined last night to comment on the approach for the group, which owns 123 newspaper titles and 132 radio stations in Australia and New Zealand. APN also has significant outdoor advertising interests in those markets and in Hong Kong, Malaysia and Indonesia.
It is understood that the funding of a buy-out with bank debt would enable Independent to take some €362-€420 million in cash from APN while indirectly holding onto its 40 per cent interest in the business.
While a return of cash to shareholders is also a possibility, it is more likely that such funds would be used to help Independent to finance its international expansion. Independent entered the Indian market last year and recently indicated that it would concentrate on non-English-speaking markets in the next phase of its expansion.
If the approach for APN is successful, Independent would manage and run the Australian business. The group would be treated as an associate company in Independent's books. It is currently treated as a subsidiary.
In addition, the involvement of private equity groups opens up the possibility that Independent would be able to take full control of APN whenever its partners decide to exit the company.
It would be normal in such circumstance for Independent to have first refusal on their stake.
The immediate catalyst for the approach was the reform this month of Australian laws that restricted the foreign ownership of media assets.
Sir Anthony has long sought to extend his reach in Australia and he was an unsuccessful bidder in 1991 for control of John Fairfax Holdings, publisher of the Sydney Morning Herald.
