O’Reilly already owns 40% of the company, but wanted to take it private. His Independent News & Media (INM) group – which owns the Irish Independent – spearheaded a consortium including private equity firms Providence Equity Partners and Carlyle Group in launching a A$1.93bn ($1.58bn) bid for the company.
The A$6.20 ($5.08) offer needed 75% of APN shareholders, only 51% of those eligible to vote backed it. INM were barred from voting by stock exchange take-over rules. The proposal valued APN at A$3.8bn ($3.1bn) including debt provisions.
His son and INM chief operating officer Gavin O’Reilly said: “Obviously we’re disappointed …[The bid] was a very full price by international standards, although I appreciate that the Australian capital markets do seem to be at dizzy heights,” he said. He would not say if the offer would be improved. “We are going to look at all are options and are in no hurry to do anything at this point,” he said in Sydney.
Major shareholders said the price offered was inadequate. The bid ran into big trouble when APN’s biggest institutional investor, Perpetual Investors, thumbed its nose at the deal last week. Melbourne’s Australian Foundation Investments, Mirabooka Investments and BT Financial group also rejected the offer. The four firms represented a chunk of around a third of the shares which voted on the plan.
“The price is inadequate,” said Jack Chemello of BT Financial Group. A total of 51% of shareholders who voted backed the deal. Eight institutions in total opposed the proposal while 24, smaller in size, backed it.
The rejection is a significant setback to INM’s Australian expansion plans. Australian take-over rules prohibit a new bid so if INM wanted to launch a fresh offer, it would have to form a new consortium with different equity partners.
Another option for O’Reilly would be sell his stake in APN to raise cash, although there is no indication as to what the media mogul’s strategy might be.
Gavin O’Reilly said that INM would however continue to view opportunities that arise in the “exciting Australasia media scene”.
APN is one of the largest media conglomerates in the region, publishing the New Zealand’s top selling newspaper, the New Zealand Herald, as well as regional newspapers in Australia such as the Sunshine Coast and Gympie Times in Queensland. It also runs over 100 radio stations in Australia and New Zealand with its Clear Communications group.
The deal if it had gone through would have netted INM as much as