A rival investor group made an 11th-hour attempt to outbid NordStar Capital LP for the company that publishes the Toronto Star newspaper on Monday, but the target’s board spurned the unsolicited offer as unworkable.
Canadian Modern Media Holdings Inc. submitted a cash bid of 80 cents a share for Torstar Corp. early Monday, a day before its shareholders were due to vote on a friendly, $60-million deal with NordStar
Nordstar raised its offer to 74 cents from 63 cents nine days earlier in response to an unsolicited offer from Canadian Modern Media.
Torstar disclosed the late offer after TSX trading closed. It said the proposal could not be deemed superior, partly because the five families that control the company’s voting trust and major shareholder Fairfax Financial Holdings Ltd. had already committed to supporting NordStar’s offer.
NordStar is controlled by Toronto investors Jordan Bitove and Paul Rivett. They announced their initial offer for the struggling newspaper publisher in late May following months of negotiations with Fairfax, which controls 40 per cent of the B shares, and the controlling families that comprise the trust.
At the end of last month, Canadian Modern Media, set up by technology entrepreneurs Matthew and Tyler Proud along with Bay Street deal maker Neil Selfe, floated an offer of 72 cents plus a contingent payment that would stem from future asset sales.
That prompted Nordstar to up the ante on July 11 and extract hard lockup agreements from Torstar’s major owners. Following the announcement, Canadian Modern Media said it would have been prepared to extend the bidding war by raising its offer to 80 cents.
The lockup agreements obligate the major shareholders to vote against any resolution that would prevent or delay NordStar’s offer, Torstar said in a statement.
Shareholders are due to vote on that agreement on Tuesday at 10 a.m. ET. The company said it had determined that, based on votes already cast, the NordStar deal had the support of 98 per cent of its shareholders, and 80 per cent of minority holders.
Canadian Modern Media’s last-minute bid did not include any offer of contingency payments, Torstar said.
“Prior to entering into our agreement with NordStar last week, we urged CMMH to put forward its best proposal. Specifically, we asked them to increase the cash component. They declined to do so,” Torstar chairman John Honderich said in a statement.
“It was only after the higher deal with NordStar was publicly announced that CMMH suggested it would have increased the cash component to 80 cents.”
Torstar said Canadian Modern Media provided no information on proposed financing on Monday, but sources close with the rival bidding group said it submitted its fully financed, binding, all-cash offer at 8 a.m. The sources said Torstar did not ask the group for a financing letter, or seek disclosure about the financial backing for the offer.
The sources spoke on condition of anonymity as they are not authorized to speak publicly on the matter.
Mr. Honderich did not respond to requests to comment.
Torstar, which also publishes the Hamilton Spectator and Waterloo Region Record in Ontario, has spent years selling assets, closing newspapers and cutting staff as advertising revenues slumped. Business conditions worsened with the pandemic. NordStar said it 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.
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