Torstar confirms Canwest bid
Shaw wins Goldman support to buy TV assets
Torstar Corp. confirmed Monday it is in the running to buy the newspaper assets of insolvent Canwest Global Communications, but did not say how much it has offered.
The owner of the Toronto Star said it entered a bid before last Friday's deadline, in contrast to reports late last week suggesting Torstar had been unable to come up with adequate financing.
Insurance and investment management firm Fairfax Financial Holdings Ltd. backed out of a separate transaction for the newspaper assets before linking up with Torstar to provide financial heft to Torstar's bid.
"The offer was submitted pursuant to a confidential bidding process and details of the offer cannot be disclosed," Torstar said in a release. It added that "there can be no assurance that Torstar’s offer will be accepted or that a transaction will be consummated."
Fairfax was a significant holder of Canwest shares before they were delisted, and it owns roughly a fifth of Torstar's non-voting B shares.
The owners of Canwest Global Communications have been seeking buyers for the publishing assets, known as Canwest LP, since Canwest began a lengthy restructuring process last year.
After multiple delays, Canwest's creditors, led by the Bank of Nova Scotia, set Friday's deadline for final offers. Other reported bidders included Victoria-based newspaper proprietor David Black and Vancouver's Glacier Media, which owns an array of papers in B.C. and elsewhere.
Former Canwest CEO Leonard Asper, after losing control of the newspaper and broadcasting company his father built, took part in a separate bid.
The papers, formerly known as the Southam group and purchased by Canwest from Conrad Black's Hollinger organization, include the National Post and 10 other dailies ranging from the Montreal Gazette to the Victoria Times Colonist, as well as 35 community publications.
The creditors are seeking something in excess of $950 million for the properties, and are believed to prefer bids with a large cash component and buyers who would take the entire chain — not pluck specific titles.
TV deal signalled
Separately on Monday, Calgary-based cable-TV operator Shaw Communications Inc. moved a step closer to completing its purchase of Canwest's television assets by reaching an agreement to buy the stake held by U.S. investment firm Goldman Sachs.
Shaw said it will pay $700 million to buy Canwest's specialty television channels, controlled by Goldman Sachs under a 2007 agreement when it supported Canwest in acquiring the Alliance Atlantis properties.
"We are pleased to announce that we have come to an agreement with all constituent parties involved in a restructured Canwest, including Goldman Sachs, and are excited about the opportunity to acquire the entire company now," Shaw CEO Jim Shaw said.
The deal brings Shaw's total investment in Canwest's broadcasting assets to $2 billion US — about $1.2 billion in cash and more than $800 million in assumed debt.
Having Goldman Sachs onside was seen as the final hurdle in Shaw's takeover of Canwest's broadcast holdings. The Wall Street firm did not like Shaw's original bid and worked vigorously to stall the transaction in court.
If the court approves, Shaw will own all of Canwest's over-the-air Global television stations, as well as specialty cable channels such as Showcase, Slice and HGTV.
Shaw has repeatedly said it wanted all of Canwest's TV assets but had no interest in the publishing unit. It is especially interested in digital content as it prepares to roll out a national wireless network.
The deal has "little downside" for Shaw, enabling the company to integrate its distribution capacity with content "in a world where media continues to seek new forms of distribution," debt-rating agency DBRS commented.
"In addition to bringing a number of benefits to the broadcasting system in Canada, DBRS believes this investment will give Shaw the indirect benefit of being a vertically integrated content and distribution company, with options for the future," the agency said.
However, analyst Dvai Ghose of Genuity Capital Markets was nonplussed, questioning whether media consolidation ever truly leads to cost savings and synergies for the conglomerates.
"We thought that Shaw had proved this when they successfully spun out their media assets through Corus to shareholders in 1999," Ghose said in a note to clients. "We therefore strongly question why Shaw would want to reverse what has been a seemingly successful strategy of separating connectivity from content."
With files from The Canadian Press