Sale of Toronto Newspaper Seals Nearly $2 Billion in Lost Value
Torstar Investors Accept NordStar Takeover as Rival Bid Rejected
(Bloomberg) -- Investors in Torstar Corp., the owner of the Toronto Star and other newspapers, endorsed a C$60 million ($45 million) takeover by NordStar Capital LP after a sweetened bid from a rival group was rejected by the company’s board.
Shareholders passed a resolution Tuesday approving the offer for 74 Canadian cents a share. NordStar is controlled by Jordan Bitove and former Fairfax Financial Holdings Ltd. President Paul Rivett. Fairfax, led by Chief Executive Officer Prem Watsa, owns 40% of Torstar’s non-voting shares and backed NordStar’s offer.
The takeover represents the end of an era for one of Canada’s largest newspapers, which has been controlled by a voting trust of several Toronto families for decades. In 2004, the company, which used to own the Harlequin books franchise, hit a peak a stock market value of nearly C$2.5 billion ($1.9 billion). But it has been unable to turn around years of steady declines in advertising revenue and circulation.
Torstar’s board dismissed a last-minute revised proposal from Canadian Modern Media Holdings, which on Monday offered to pay 80 cents a share. The rival group, which is led by entrepreneur Tyler Proud and includes Dye & Durham Ltd. CEO Matthew Proud, investment banker Neil Selfe of INFOR Financial Group Inc. and former Ontario finance minister Greg Sorbara, last week offered 72 cents plus contingency payments based on future asset sales they said could be worth an additional 50 cents.
That prompted NordStar to boost its price on July 11, up from its original 63-cent offer in May.
Torstar’s board said the new CMMH bid didn’t provide information on proposed financing and couldn’t be seen as a “superior proposal” because it couldn’t be completed without “unreasonable delay” relative to NordStar’s deal. CMMH representatives declined to comment, citing a non-disclosure agreement with Torstar.
All five families who control Torstar’s voting shares favored the NordStar offer, Torstar Chairman John Honderich said during the 15-minute virtual meeting.
“The families have held control for more than 63 years and I’m proud to say not one voting share has been sold in this period,” said Honderich, who’s also head of one of the families. “The families’ dedication to the company has been a constant. They’re uniting in saying this outcome is in the best interest of the company.”
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