IN&M puts Australian plan on hold

Independent News & Media (IN&M) is expected to look again at acquiring Australian media group APN after confirming yesterday that talks over a formal offer had ended.

Analysts and sources close to the company said the fact that discussions had ceased did not detract from the attractiveness of the deal and it was unlikely that Sir Anthony O'Reilly's Independent would walk away completely.

Independent, which already owns 41 per cent of APN, last month linked up with private equity group Providence to make a A$3.8 billion (€2.3 billion) approach for APN, which owns 123 newspaper titles and operates 132 radio stations in Australia and New Zealand.

However, in a statement to the stock exchange yesterday, Independent said it had been unable to finalise the terms of the proposed deal in line with its own timetable.

"As a result, the current discussions between the proposed consortium members have been terminated at this time," it said, adding that it would continue to examine opportunities in the Australian market.

Sir Anthony has long sought to extend his reach in Australia, a prospect that was boosted recently by a government decision to scrap restrictions on foreign media ownership in the region from next year, and yesterday's announcement is not expected to halt his plans.

Independent declined to comment on the reasons for withdrawing from discussions before making a formal bid, but it is believed concerns may have arisen over the ownership structure and Independent's plans to withdraw cash from the group.

The proposed deal was priced at $6.02 a share, a 9.65 per cent premium on APN's closing price the day before the approach was made. If it had gone ahead, it is believed Independent planned to manage and run the Australian business as an associate company, rather than as a subsidiary as it is treated now.

It is thought this arrangement may not have been satisfactory to the private equity players involved, given their input into the overall deal, and may have led to a breakdown in talks.

One onlooker also said the issue of timing had been raised, implying that the group had hoped to conclude a deal this side of Christmas and, if that was not possible, it would rather wait until the new year.

Analysts are still confident that a deal will be done sooner rather than later, either under new terms with Providence or more likely with another private equity player.

In its latest set of results for the six months to the end of June, Independent reported revenues from Australasia of €366 million, marginally up on the prior year, and operating profits of €83.2 million, 2 per cent ahead of the year-earlier period.

Shares in APN plunged more than 6 per cent in Sydney yesterday to A$5.78, though Independent reacted more positively, adding more than 1 per cent, to close at €2.67 in Dublin.