Deals and IPOs

Australia's Consolidated Media Share Trade Halted


Shares in Australia's Consolidated Media Holdings were placed on a trading halt on Monday as Lachlan Murdoch, son of media magnate Rupert, and Australian tycoon James Packer prepared to update investors on takeover plans.

Lachlan Murdoch, son of News Corp.'s Rupert Murdoch, arrives with his wife, Sarah O'Hare, for the annual Allen and Co.'s media conference Wednesday, July 11, 2007, in Sun Valley, Idaho. (AP Photo/Douglas C. Pizac)
Douglas C. Pizac

Murdoch and gambling magnate Packer's joint bid for Consolidated Media, a buyout worth around A$3.3 billion (US$3.1 billion) launched in January, stalled last month when key financial backer SPO Partners & Co withdrew.

Packer and new financier, U.S. private equity firm Providence Equity Partners, were locked in weekend negotiations over the price of the deal, The Age newspaper reported.

"The company will provide an update on the status of the non-binding indicative proposal ... announced to the market on Jan. 21," Consolidated Media said in a statement to the Australian Stock Exchange on Monday.

Consolidated owns 25 percent of pay-TV provider Foxtel, 25 percent of Australian publisher PBL Media and stakes in online assets. 

Packer changed his mind about forming a 50:50 joint venture, instead seeking to sell down a 38 percent stake in CMH he already owns to 25 percent, leaving Murdoch and Providence to take a 75 percent stake, The Age said.

Packer also insisted on a takeover price of A$4.80 a share, the newspaper said without naming its sources.

The January bid was worth A$4.70 a share at current prices, while Providence wants to offer around A$4.60, the article said.

Consolidated Media shares last closed at A$4.07.

Illyria, Lachlan Murdoch's private company, would pay about A$600 million, with Providence providing about A$900 million. Packer would invest A$500 million for his 25 percent stake, leaving him with a return of more than A$700 million, up from more than A$200 million under the original proposal, the newspaper said. 

Packer and Murdoch's January buyout offer came less than three months after existing Consolidated shareholder Packer, separated his late father Kerry's media business from gaming to focus on building up the gambling operations.  

Debt-funded acquisitions have become increasingly expensive because a global credit crunch has sent financing costs sharply higher. 

The proposed deal would mark Lachlan's first big business move since quitting his father's business in 2005. He remains a News Corp director. 

Illyria and Consolidated are being advised by Lazard Carnegie Wylie.