Alliance shareholders approve takeover
EmptyTORONTO -- Canadian broadcaster Alliance Atlantis Communications Inc. on Thursday secured overwhelming shareholder approval for its CAN$2.3 billion ($1.99 billion) takeover by CanWest Global Communications Corp. and Goldman Sachs and Co.
But while clearing one hurdle, another was thrown in its way when unit holders of Movie Distribution Income Fund said they will go to court Thursday for a veto over the proposed purchase of Alliance Atlantis.
Movie Distribution Income Fund holds a 49% stake in Motion Picture Distribution LP, an independent distributor controlled by Alliance Atlantis through a 51% stake.
Lawyers for Movie Distribution Income Fund said they are pursuing a court injunction against the Alliance Atlantis takeover so they can have a say in who the Canadian partner will be after Goldman Sachs eventually purchases the entire movie distribution unit.
"It is clear that it is intended that Alliance Atlantis' interest in MPD is to be acquired by Goldman Sachs and an as yet unidentified Canadian partner, and as a consequence we believe that our consent is required," said Rubin Osten, head of a special committee of trustees for Movie Distribution Income Fund.
Canadian law requires that Goldman Sachs have a Canadian partner to exercise effective control over MPD as movie distribution companies are considered culturally sensitive entities.
Responding, executives at Alliance Atlantis and CanWest Global on Thursday argued consent of the trustees of the Movie Distribution Income Fund is not required to conclude the takeover deal.
Alliance Atlantis and CanWest Global added in their own statement that ongoing "discussions" with trustees of the Movie Distribution Income Fund and management of MPD will continue.
Ben Mogil, an analyst with Toronto-based Westwind Partners, in a note Thursday said the court intervention by the income trust indicated that buyout negotiations for the 49% interest in MPD by Goldman Sachs have stalled.
Mogil said Movie Distribution Income Trust is attempting to force a higher purchase price from the Wall Street powerhouse, which also is purchasing a half-stake in the popular "CSI" franchise as part of the wider takeover deal for Alliance Atlantis, leaving CanWest Global with the broadcaster's coveted 13 cable channels.
Mogil said Goldman Sachs has already put a $9 per-share value on MPD's controlling stake. He predicted the trustees at Movie Distribution Income Trust will not likely get a higher takeout price for their minority stake, and now risk with their last minute maneuvering leading Goldman Sachs to conduct a "fire sale" of the 49% stake in MPD to ensure the larger Alliance Atlantis takeover deal goes ahead without further disruption.
Tom Strike, executive vp of CanWest Global, said his company and Goldman Sachs "intends to continue to pursue a satisfactory resolution with the trustees of the Fund and would take whatever legal action it deemed necessary to maximize the likelihood of a timely completion of the arrangement."
Meanwhile, Alliance Atlantis shareholders overwhelmingly approved the CAN$53 cash per share takeover by CanWest Global and Goldman Sachs.
During a special shareholders meeting in Toronto, 99.7% class A voting shares and 99.99% of class B, nonvoting shares, were cast in favor of the purchase.
The takeover deal must now secure approval from Ontario Superior Court of Justice and the Canadian Radio-television and Telecommunications Commission, the country's broadcast regulator.
Alliance Atlantis and CanWest Global project the acquisition will be completed by late July or early August.