Independent News & Media confirmed yesterday that it had made an offer to buy out minority shareholders in Australia's APN News & Media.
Following press reports, INM, the publisher of The Independent, said that "in conjunction with Providence Equity Partners and other capital partners, it has approached the board of APN regarding a possible leveraged buyout of the entire share capital of APN".
INM, which is based in Ireland but owns newspapers around the world, already has 40 per cent of APN, which owns The New Zealand Herald and a string of media assets in Australia. The offer put an enterprise value on APN, which is listed in Australia, of A$3.8bn (£1.5bn). Under the plan, the business would be acquired by a private company newly formed by INM's consortium, with INM retaining a stake of 40 per cent in APN.
If the deal succeeds, INM will manage APN, which will no longer be a subsidiary of INM but will be accounted for as an associate company. As an associate company, APN's debt will not appear on INM's books. The highly leveraged nature of the takeover will free up cash that will go back to INM.
INM said: "The balance of the cash to be received by INM as a result of the consortium's offer will be applied towards the acceleration of the group's expansion in its global markets, to the maximisation of shareholder returns and to general corporate purposes."
Analysts said the emphasis on investing in global markets indicated that the funds were not destined for the UK or Ireland. Aside from Australia and New Zealand, INM's global investments include assets in South Africa and India.
Davy, the stockbrokers, said: "INM indicated that it would retain its holding in the new private company. Assuming that this will be a leveraged vehicle, eg, 20 per cent equity, 80 per cent debt, INM will have to reinvest approximately $175m to retain its interest. The net result is a release of up to €500m (£335m) in cash to INM while at the same time APN's debt disappears off the balance sheet."Reuse content