The Wall Street Journal-20080123-Buyout of Consolidated Media Looks Set
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Buyout of Consolidated Media Looks Set
SYDNEY, Australia -- James Packer and Lachlan Murdoch look set to succeed with their 3.3 billion Australian dollar (US$2.84 billion) plan to privatize Australia's Consolidated Media Holdings Ltd., and rival bids are unlikely to emerge, analysts said.
Shares in Consolidated Media closed up 9.6% at A$4.23 (US$3.64) amid a sharply weaker broader market after Mr. Murdoch -- son of News Corp. Chairman and Chief Executive Rupert Murdoch -- and Mr. Packer unveiled their plans.
The closing price compares with a current indicative offer price of about A$4.75 under the 50-50 privatization proposal. The two men are offering A$4.06 cash plus 0.1116 of a Seek Ltd. share for each Consolidated Media share. Consolidated Media owns a 27% stake in online-recruitment firm Seek.
Under the plan, Mr. Packer will seek an exemption from the Australian corporate regulator from rules that could force him to sell his existing 37% stake in Consolidated Media if a higher bid emerges, discouraging rival bidders, analysts say. The offer has also been declared final -- which means that under Australian law, it can't be raised.
Mr. Packer's stake in Consolidated Media is held via Consolidated Press Holdings Ltd., a private company owned by Mr. Packer.
If the deal goes ahead, Mr. Packer could shell out about A$338 million to increase his holding in Consolidated Media to 50%.
Consolidated Media said Monday it had received a nonbinding indicative proposal from Lachlan Murdoch's private company, Illyria Pty. Ltd., and Consolidated Media's major shareholder, Consolidated Press Holdings, to acquire 100% of Consolidated Media.
Analysts said that while the proposal is unlikely to have significant implications for the Australian media sector in the near term, a privatized Consolidated Media will be a powerful entity.
"The newly formed consortium will present a daunting rival to its media peers, given its direct focus on pay TV, and extended links across free-to-air television, magazines, online, and newspaper publishing," Goldman Sachs JBWere analysts said in a note.
Consolidated Media owns a 50% stake in Fox Sports and 25% stakes in both the pay-television business Foxtel and PBL Media, which owns ACP magazines and the Nine television network.
News Corp. owns the other 50% of Fox Sports, and 25% of Foxtel; Telstra Corp. owns the remaining 50% of Foxtel. Private-equity group CVC Asia Pacific owns the balance of PBL. However, the move is independent of News Corp. holdings, which include Fox News Channel and Dow Jones & Co., publisher of The Wall Street Journal.
