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Independent News & Media's plans to privatise its Australasian subsidiary APN News & Media have been revived, with chief executive Sir Anthony O'Reilly and private equity partners detailing a fresh offer for the company.
Dublin-based Independent News & Media and its US-based partners - Providence Equity Partners and Carlyle Group - yesterday offered A$6.05 per share for the remainder of the company.
INM already owns 40 per cent of APN, which publishes the Herald and has significant newspaper, magazine and radio interests in Australia and New Zealand.
It is understood the offer, which values APN at A$3.8 billion ($4.2 billion), is designed to take advantage of impending changes to Australian media ownership rules and will generate funds for INM to invest in other markets.
The proposal is for a scheme of arrangement and requires approval from 75 per cent of shareholders before all outstanding shares can be compulsorily acquired by the consortium.
It is understood that under the deal INM would hold 35 to 40 per cent of the privatised company with Providence and Carlyle holding equal shares of the remainder. Debt would be increased from A$660 million to A$2.3 billion, a source familiar with the deal told the Business Herald.
The increase in APN's debt would allow INM to take money out of APN to invest in Northern Hemisphere assets which it believed would provide a better return, the source said.
INM's shareholding in APN would remain about the same, but APN's total equity would be smaller.
The proposal also incorporates an understanding that the three partners would provide additional equity for larger acquisitions in the Australian market if they arose, it is understood.
The source said the proposal was not built on expectations for cost savings at APN. The bid represents a price of 11.9 times APN's adjusted earnings before interest, tax, depreciation and amortisation of about A$315 million in the past financial year.
But a source said reduced estimates of trading profits to A$291 million, based on unwinding the consolidation of its radio joint ventures with US-based Clear Channel, would represent an offer of 12.9 times earnings - similar to the average price paid in other recent Australian media acquisitions.
Yesterday's bid was INM's second attempt at privatising APN. In October the APN board said it had received a preliminary approach about taking the company private, but that deal did not proceed.
It is understood INM was offering A$6.01 a share, compared with yesterday's offer of A$6.05.
Shares in APN were unchanged on the ASX yesterday at $6.15. They have risen from A$5.49 immediately before the first proposal was revealed by the company.
It is understood that the initial proposal by INM and Providence was developed in the Northern Hemisphere but they approached the Sydney office of Carlyle after the first deal came to light.
Carlyle set up office in 2005 with bullish expectations for private equity in Australia and for the Asian market. The firm has worked with O'Reilly and Providence in the past.
Ted Harris, chairman of the independent sub-committee of the APN board that will examine the offer, confirmed yesterday he had received an offer and it would be considered.
