Independent moves closer to buying APN

Independent News and Media (IN&M) moved a step closer to buying Australian group, APN, yesterday when the latter's board recommended its €2.3 billion offer to shareholders.

IN&M owns 41.6 per cent of APN, which is Australia's biggest regional newspaper publisher and owns magazines, radio stations and an outdoor advertising business. The Irish media giant has joined forces with Providence Equity Partners and the Carlyle Group to bid for the remaining 58.4 per cent of APN.

The offer is priced at $6.10 Australian dollars (€3.64) a share. This values the company at €2.3 billion.

The Independent-led consortium intends paying for this through a mixture of equity and debt.

The deal will reduce IN&M's holding in APN, but will result in an estimated €420 million payment to the Irish company.

Yesterday, IN&M announced that the APN board has recommended the offer to shareholders. The statement said: "An independent committee of the board of APN formed to assess the proposal recommends that shareholders vote in favour of it, in the absence of a superior proposal."

APN board member Ted Harris chaired the committee. Its other members were Sir Wilson Whineray and Kevin Luscombe.

"Mr Harris said the recommendation of the committee is supported by the full APN board, and all Independent directors intend to vote in favour of the offer in respect of APN shares they own or control," the statement added.

It also acknowledged that Independent's unwillingness to sell its 41.6 per cent stake to any potential rival bidders means that the business is unlikely to attract any other offers.

Independent initially proposed paying $6.02 a unit for APN, but offered $6.10 following talks with the Australian group's board.

The current offer values APN at 13 times earnings before interest, tax and write-offs. The group said that this compares favourably with multiples paid for other businesses in its sector.

If the deal goes ahead, IN&M will hold 35 per cent of the consortium.

Providence will have 37.5 per cent and Carlyle will control the remaining 27.5 per cent.

However, IN&M will have 39.3 per cent of the voting rights, which it says reflects its "continuing primary role within the operations of APN".

It will also have preferential rights to buy either of its partner's stakes if they sell out of the consortium.

The Independent group was also in the news last week when it emerged that businessman Denis O'Brien increased his stake in the company from 3 per cent to 5.06 per cent.

Its biggest shareholder is Sir Anthony O'Reilly, who successfully outbid Mr O'Brien in the battle to buy Eircom in 2002.