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Astral's Greenberg shows that all shareholders are not equal

Astral CEO Ian Greenberg

Reading the press release for BCE Inc's takeover of Astral Media Inc., one couldn't help wondering if the companies had something they wanted to hide.

After all, BCE and Astral highlighted the big 39 per cent premium for non-voting shares of Astral. But what about the non-voting shares held in large part by the family of Astral chief executive officer Ian Greenberg? Perhaps BCE and Astral didn't want to remind other shareholders that they were about to get less, because BCE is paying a 47 per cent premium for the voting shares, and a huge amount for the so-called "special shares" that only the Greenberg family owns.

To be fair, the Greenberg family built a great company that delivered for all shareholders year after year, and finally fetched a big premium. How big, though, depends.

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Astral is one of the remaining dual-class share structures in Canada without what's known as coattail protections that ensure that all shareholders are treated equally in a takeover.

The company has about 52.7-million non-voting shares ACM.A-T that BCE is paying $50 apiece for, and about 2,754,172 Class B voting shares ACM.B-T for which Bell is paying $54.83. A holding company for Astral's founding Greenberg family owns about 55 per cent of the voting stock. Businessman Paul A. Bronfman owns another 19 per cent of the voting shares.

The really big per-share payout, though is for the 65,000 special shares that only the Greenbergs own. It's hard to say what the value of the special shares should be, as there's no market.

Here's a couple ways of looking at it. They have super voting power, giving the owner 10 votes instead of just one for the regular voting shares. So maybe one could argue they are worth 10 times a voting share, or $548.30 apiece. Or one could say the special shares are convertible into two B shares apiece, so they are worth $109.66 apiece. Or maybe the truth is somewhere in between.

In fact, BCE is paying $50-million for the special shares, or about $769 apiece.

The last time there was a big media takeover with a premium for the controlling shareholders, it was CHUM Ltd., and it stirred up a fuss about coattails. This will be an unfriendly reminder that for a few Canadian companies, when it comes to a takeover, all shareholders are not equal.

(For more on the subject, here's a good story on it by two Globe and Mail colleagues.)

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