Merrill Lynch Global Private Equity was looking at a possible bid for Canada's CanWest Global Communications' stake in Australia's Ten Network Holdings, a source familiar with the situation said Monday.
"Merrill are definitely in that process," the source told Reuters.
The Merrill arm could be one of a number of potential bidders for the television broadcaster, with the Australian Financial Review newspaper reporting on Monday that private equity firms Hellman & Friedman and CCMP Capital Asia were also conducting due diligence on Ten.
However, a second source said the newspaper report, which said the three would separately offer about A$2.90 a share each for CanWest's 56.4% stake in Ten, was not accurate.
A Ten spokeswoman declined to comment.
Ten shares fell 2.4% to A$3.25 in the morning session Monday, giving it a market value of about A$3 billion (US$2.3 billion), including the CanWest stake.
The sale was set in motion in December when Ten, Australia's third-biggest TV broadcaster, announced it would help CanWest study selling its stake.
Interested bidders submitted indicative bids last month. However, CanWest failed to attract interest from likely trade buyers such as Macquarie Media, Rupert Murdoch's News Corp. and John Fairfax Holdings.
Other Australian newspaper reports on Monday said strict confidentiality agreements and high valuations had deterred potential bidders.
The Sydney Morning Herald, citing an investment banking source, said CanWest had been forced to relax the conditions on bidders due to lack of interest.
WIN To Bid?
Analysts said Australian privately owned regional TV broadcaster WIN Television was a possible bidder. WIN owner, billionaire Bruce Gordon, upped his stake in Ten to 14% last month.
"WIN should be the most logical or the keenest of the buyers given their relationship as the regional affiliate. Whether they can cobble together a deal with a partner still might be a bit difficult for them," Shaw Stockbroking analyst Greg Fraser said.
Ten said on Dec. 7 that CanWest had agreed that if its stake was sold the buyer would make the same offer for the remaining 43% of the company. CanWest is under no obligation to sell its stake at this stage.
The broadcaster was once seen as off-limits to buyers but new Australian media ownership laws due to come into force this year have triggered a wave of consolidation in the sector.
CanWest is also running a separate sales process for the sale of its stake in New Zealand radio and television group CanWest MediaWorks.
Merrill Lynch's private equity arm led a consortium which bought U.S. hospital chain HCA for US$21 billion last year. In 2005, it led another group which took car rental company Hertz Global Holdings private.
Ten, Australia's third-biggest TV broadcaster, operates commercial free-to-air licenses in Sydney, Melbourne, Brisbane, Adelaide and Perth, targeting the under-40 age group.
CanWest, which has a 14.5% voting interest in Ten, has retained Citigroup Global Markets, while Australian investment advisory firm Gresham is acting for Ten.