Ex-Heinz Boss Wins Australia's Fourth Largest Media Group

13 February 2007

SYDNEY: Independent News & Media, the Dublin-based international publishing group chaired by former Heinz ceo Sir Anthony O'Reilly, is to acquire Australia's APN News & Media after the latter accepted an improved offer for the 58% of its shares IN&M doesn't already own.

The $A6.10 a share deal values the nation's fourth-largest media group at A$3.8 billion ($2.95bn; €2.27bn; £1.51bn) including debt. Two earlier offers from IN&M - respectively of A$6.02 and A$6.05 - were rejected by the Sydney-based company's independent assessment committee.

Says APN deputy chairman Ted Harris : "After negotiating the increase from the initial proposal of A$6.02 a share to the final offer of A$6.10, the independent board has formed the view that the increased offer is in the shareholders' best interests and we recommend all shareholders vote in favour of the proposal."

But as is fast becoming inevitable these days, the presence of private equity predators - in this case US firms Carlyle Group and Providence Equity Partners - looms over the acquisition.

On completion of the deal PEP will hold 37.5% of APN and Carlyle 27.5%, leaving O'Reilly's IN&M with just 35% - significantly less than the 42% it previously owned.

There are two likely explanations for this seeming anomaly.

O'Reilly needs the cash. And/or he has taken out an 'insurance policy' with the US duo who will hang onto their shares in the event of a hostile takeover - a not unlikely possibility in view of the expected free-for-all that will follow Australia's upcoming media liberalisation.

Data sourced from Financial Times; additional content by WARC staff