A late bidding war for Torstar Corp. is over, after NordStar Capital LP raised its offer by 17.5 per cent to $60-million Saturday and locked up key shareholder support.
“Although our initial offer was fully valued, this was not an opportunity we were going to let pass,” NordStar chief executive officer Jordan Bitove said in a statement. “We are humbled to have received the unique support of the Torstar board and their recognition that we are the right custodians for these unique assets.”
But the impending end of a process to sell the parent of the Liberal-leaning Toronto Star newspaper has triggered harsh words from one of Ontario’s most senior Liberal political voices, former finance minister Greg Sorbara, who was part of the losing bid.
“I believe the shareholders of Torstar have made a terrible mistake,” said Mr. Sorbara, who partnered with a late rival bid from Canadian Modern Media Holdings Inc. That company is led by technology entrepreneur Tyler Proud and backed by veteran Bay Street investment banker Neil Selfe and Mr. Proud’s brother Matthew Proud, CEO of legal technology provider Dye & Durham Corp. “I regret it and I think the people of Toronto and Canada will regret it eventually,” Mr. Sorbara said.
NordStar said Saturday it had increased its offer to 74 cents a share from its previous bid of 63 cents in May. Crucially, Torstar’s major shareholders committed to support the higher offer under hard lockup agreements. The five families behind Torstar’s voting trust that controls the voting shares and Fairfax Financial Corp., which owns 40 per cent of non-voting stock, had backed the earlier bid, but left open the option to support a higher bid.
The offer was sweetened days after The Globe and Mail revealed CMMH was preparing an unsolicited bid of 72 cents a share for the struggling but debt-free publishing company, which its principals believed was deeply undervalued given that it was sitting on $70-million in cash and valuable non-core assets.
The CMMH proposal, submitted formally on Friday, included a promise of contingency payments to shareholders from future asset sales, which Mr. Selfe said were worth at least another 50 cents. Mr. Selfe told The Globe his group was ready to increase the cash part of the bid to 80 cents if given the chance.
But the rival bid was conditional on gaining the support of Fairfax and the voting trusts’ Honderich, Hindmarsh, Campbell and Thall and Atkinson families. The Torstar board said Saturday representatives of the trust and Fairfax did not intend to support the CMMH bid.
“Clearly, [the 74-cent bid] is inferior to what we were prepared to offer,” Mr. Selfe said. “Our financing was in place and we were prepared to meet Torstar’s proposed timeline. It is bewildering to me how this could happen if one were focused on maximizing shareholder value.”
Fairfax CEO Prem Watsa did not reply to a request for comment on why his company decided to enter into the lockup agreement.
Mr. Sorbara criticized the deal, saying it “left money on the table” and because the Bitove family is close to Paul Godfrey, executive chairman of Postmedia Network Canada Corp., whose flagship, right-of-centre newspaper the National Post competes with the Star. In addition, Canso Investment Counsel Ltd, a major lender to Postmedia, is financing NordStar. The CMMH offer had lined up financing from a Canadian bank, with about $20-million committed by the principals.
“They have sealed an unhappy fate” for the Star, Mr. Sorbara said, adding he believed it would “become part of [Postmedia] and be folded into the National Post. The reformist voice of the Star will be permanently silenced. That will be a sad legacy for the five families who once took pride in the mission of their newspaper.”
“He’s allowed to say what he wants to say,” Torstar chairman John Honderich said in response to Mr. Sorbara’s comment. “I’m not replying.” Mr. Honderich otherwise declined to comment on the deal.
A NordStar spokesman said Mr. Sorbara’s statements “aren’t worthy of comment.”
Both bidders pledged to maintain the Star’s progressive editorial stance, embodied in a list of editorial values known as the Atkinson principles, named after late publisher Joseph Atkinson. “The Toronto Star is a very important pillar of this country, and we intend to do the best we can to ensure this Canadian institution thrives for another 100 years,” said Mr. Bitove, whose family is best known for establishing the NBA’s Raptors in Toronto. Mr. Rivett recently retired as Fairfax president.
Torstar, which also publishes the Hamilton Spectator and Waterloo Region Record in Ontario, has spent years selling assets, closing newspapers and cutting staff as losses piled up. Business conditions worsened with the pandemic. NordStar plans to accelerate the push to make the company a digital news and information provider, while selling non-core assets they believe can bring in $100-million.
Shareholders are set to vote on the offer July 21.
With a report from Andrew Willis
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