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Canadian broadcaster CanWest Global Communications Corp. said Monday that it intends to take control of Ten Network Holdings Ltd. after apparently failing to find a buyer for its 56.4% stake in Australia’s Ten Television Network.
“In Australia … we have determined that retaining our investment in TEN to be in the best interests of our shareholders,” Leonard Asper, CEO of Winnipeg, Manitoba-based CanWest Global said in a statement.
His announcement was preceded by shares in Ten Network Holdings Ltd. being suspended from trading on the Australian Stock Exchange following media reports that Can West Global has been unable to find a buyer for its majority stake in Ten.
CanWest initially announced in October that it was considering selling its 56.4% stake in the No. 3-ranked Australian network.
Without giving details on the sales process, Asper confirmed it had been abandoned in favor of CanWest Global retaining a majority voting equity interest in the broadcaster by exercising its right to exchange its ordinary shares and convertible debentures of TEN into ordinary shares of Ten Network Holdings Ltd.
Media reports Monday suggested that talks with possible buyers, including private equity firms Blackstone Group and the Carlyle Group collapsed over price. (Carlyle and Blackstone are part of a consortium that owns Nielsen Business Media, parent company of The Hollywood Reporter.)
CanWest is reported to have sought AUS$3.10 ($2.57) a share for its stake, while private equity groups were willing to pay a maximum of AUS$2.80 ($2.35).
After its proposed share conversion is completed, CanWest Global will hold about 523 million shares in the Ten Network, representing a 56.4% controlling equity stake.
CanWest Global said it has applied to Australia’s Foreign Investment Review to ensure its share conversion plans conform to foreign ownership rules in that country.
CanWest Global revealed its hand Monday following a swirl of rumors that surrounded the future of its Australian broadcast stake.
Ten Network Holdings in a statement to the Australian Stock Exchange said it had “been advised by CanWest at this time in relation toits position regarding the sale process.”
Ten shares had dropped AUS13 cents to AUS$2.97 ($2.46) before trading was halted. Ten asked that the shares be suspended until Wednesday or a further announcement.
Analysts on Monday said that CanWest’s protracted bidding process and its price for an asset with little room for cost-cutting led to the collapse in talks.
“We’ve been saying for a long time that the CanWest price is too expensive because there’s limited interest in a company trading at 14.3 times earnings, so relative to other deals, it’s just uber expensive,” one analyst said. “They do run a tight ship, so there’s limited scope to cut costs further.”
On Monday, Ten Network Holdings’ executive chairman Nick Falloon released a statement putting his support behind CanWest Global’s decision to retain control of the Australian broadcast group, adding that his network “welcomes CanWest’s decision as a sign of continued belief in the group’s future growth prospects.”
Ten is set to release its third-quarter results Wednesday. CanWest Global’s decision to sell its broadcast assets Down Under follows a relaxation of foreign media ownership rules in Australia.
Pip Bulbeck reported from Sydney; Etan Vlessing reported from Toronto.
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