A consortium led by Independent News & Media, the owner of The Independent, was close to sealing the buyout of its Australian associate APN yesterday, after the APN board recommended its improved A$1.87bn (£714m) offer for the 58 per cent stake that INM does not already own.
INM, which is listed on the Dublin and London stock exchanges, joined forces with private equity companies The Carlyle Group and Providence Equity Partners to buy APN, whose key assets include New Zealand's largest newspaper, The New Zealand Herald, as well as more than 100 radio stations.
The new cash offer of A$6.10 was 5 cents higher than the original bid made late last year, and values APN at A$3.8bn - around 13 times its 2006 earnings.
The deal will see INM reduce its stake in the company from 41.6 to 35 per cent. However, as APN will take on much higher debt after the transaction, INM will take out cash as part of the deal. INM will raise some €350m (£230m) for the group, which it said would "be applied towards the acceleration of the group's expansion in global markets, to the maximisation of shareholder returns and to general corporate purposes".
Providence and Carlyle will own 37.5 and 27.5 per cent respectively. However, INM will have primary control of the business, retaining 39.3 per cent of APN's voting interests, as well as preferential rights to buy out the other shareholders if they should seek an exit.
Commenting on the deal, Sir Anthony O'Reilly, INM's chief executive, said: " This transaction with APN continues our successful and long-standing investment in Australasia, while at the same time will yield additional resources for the continued expansion of the INM Group, which we believe will further enhance shareholder returns."
The offer represents a 17.1 per cent premium to the company's share price before news of INM's first approach broke into the market on 20 October. However, the deal still faces possible opposition from APN's second-largest investor, Perpetual Investments, which said the price was too low.
The board recommendation appears to bring an end to a five-month pursuit of APN. INM joined forces with Providence last autumn, offering A$6.02 a share. After that was rebuffed, Carlyle Group came on board, leading to a A$6.05 bid last month.
The purchase of APN is among a string of deals in the Australian media sector, following liberalisation of the country's media ownership laws.