Australia's Ten Network Reviewing Several Takeover Bids

Ten Network chairman Hamish McLennan

Discovery Communications and Foxtel reportedly made a joint bid as expected

Third-ranked Australian commercial broadcaster Ten Network Holdings said on Wednesday that it has received an undisclosed number of takeover bids, with reports saying that joint bidders Discovery Communications and local pay TV giant Foxtel remain the frontrunners despite offering a price tag that came in below what Ten had been hoping for.

In a statement to the Australian Securities Exchange, Ten said that it had “received non-binding, conditional proposals from a number of parties” by a deadline it had previously set, but did not detail any of the bids or the number of bids.

Fairfax Media reported that the Discovery-Foxtel bid was the only bid from industry players, with additional bids most likely coming from private equity groups, including New York hedge fund Anchorage Capital Group, which approached Providence Equity Partners about exploring a joint bid in October, and Haim Saban's Saban Capital Group.

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News Corp newspaper The Australian said that the Discovery-Foxtel bid was a non-binding cash-and-share offer of 16–21 cents (AUS20c-25c) that values Ten at $428 million-$558 million. That bid is below the roughly $650 million price tag the Ten board and advisor Citigroup is believed to have targeted. Discovery Communications has previously said it will not comment on the Ten auction.

The Fairfax report added that several issues make it possible that no bid will be successful. They include the unwillingness of major shareholder Bruce Gordon to sell out, an AUS$200 million loan underwritten by shareholders Gordon, News Corp co-chair Lachlan Murdoch and casino mogul James Packer, Australia’s complex media ownership laws and a board view that it may be better to take the company private while it rebuilds rather than to sell it now.

Ten, which has previously cut costs by ending some news shows, said in its statement that directors will now consider the bids with Citigroup. “In this regard, it should be noted that the proposals are confidential, non-binding and conditional in nature and may or may not result in a transaction which is acceptable to the company,” Ten said.

It is believed that Ten is hoping to have made a decision in the auction process before Christmas.

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