Independent and Providence eyeing APN

Anthony O'Reilly

Sir Anthony O'Reilly's Independent News and Media has confirmed it is considering a proposal with partner Providence Private Equity to buy out Herald publisher APN News and Media.

Independent currently has 41 per cent of APN and the company yesterday announced the broad terms of proposals that would see it and Providence take over the remainder of the company, and itself ultimately retain 40 per cent.

The proposal is based around an offer of A$6.02, an Australian media analyst says, which amounts to A$2.9 billion ($3.36 billion) and values the company at A$3.8 billion.

Independent made a statement to the NZX yesterday, saying the proposed leveraged buyout with US-based Providence would enable "the acceleration of the group's expansion in its global markets".

If a deal were concluded, it was expected that Independent would manage and run APN, which would no longer be a subsidiary, and be counted as an associate company, Independent said yesterday.

Basic details of the buyout have raised speculation about whether the company will reinvest in Australasia or other parts of the world where it has interests, such as Ireland or South Africa.

The offer is part of a flurry of activity ahead of changes to Australian media ownership laws that will become effective next year.

The question is whether the privatisation is Independent's major play in Australasia, or sets it up for further acquisitions.

APN owns 23 daily newspapers including the New Zealand Herald and 100 non-dailies.

It is also a significant player in the Radio industry, with the APN Radio Division owning 50 per cent of a joint venture for radio with US radio giant Clear Channel Communications.

In New Zealand, the joint venture owns the Radio Network, which includes about half the radio industry.

Clear is the biggest radio broadcaster in the US and this week it was reported that major shareholders were planning to privatise the company.

And reports are that one of the two private equity companies bidding to take part in the proposed privatisation is Providence.

It is no stranger to the media world because it has specialised in the sector and its interests include stakes in US giants Warner Music and MGM Studios.

Were both deals to be completed, Providence would end up with a particularly large financial stake in the Australasian radio industry.

APN shares closed at A$6.17 yesterday - up 12c for the day.

The shares have risen 12.4 per cent since Wednesday's close.