INM in £1.5bn bid for Australian mediagroup

Independent & News & Media has made an offer to buy out minority shareholders in Australia's APN News & Media in a deal that values the business at A$3.8bn (£1.5bn), according to reports in Australia.

INM, the publisher of The Independent, is working with the US private equity group Providence, and possibly another private equity player, in what would be a highly leveraged transaction. INM already owns 40 per cent of the Australian business. The A$3.8bn value put on APN News & Media, which is listed in Australia, includes existing debt.

Under the plan, a new company would be formed to buy out APN News & Media. The acquisition would allow the new company to leverage up the assets, freeing cash. APN News & Media has only modest borrowings but predictable cash flows - which would be used to take on more debt. INM's shareholding in APN News & Media would remain at around 40 per cent, with private equity owning the remainder.

INM would receive A$500-700m cash as a result of the deal, which it will use for acquisitions around the globe - the company has expanded by buying international assets. In the past, INM has made investments in countries such as South Africa and India.

Sir Anthony O'Reilly, the chief executive of INM, has worked with Providence previously when they formed a consortium, which also included the buyout fund of George Soros, to acquire Eircom, Ireland 's fixed-line telecoms business in 2001.

Australia is undergoing a liberalisation of its media ownership laws, enabling foreign companies to own media assets outright. A number of international media groups is jockeying for position as the market opens up. APN News & Media is Australia's third biggest media group. It owns regional newspapers in Australia, outdoor advertising, and radio. The business has also expanded into New Zealand, where it owns the New Zealand Herald, Auckland's main newspaper and a series of regional titles in New Zealand.

APN were last night unavailable for comment.