The buzz will exit the sluggish media sector now that the bid for Consolidated Media Holdings is off.
That’s after Lachlan Murdoch bit the bullet and pulled his attempt to mount a $3.3 billion deal to privatise Consolidated Media which is the media rump of the Packer family’s PBL Media and gaming empire.
Mr Murdoch had attempted to bid jointly with James Packer in a 50-50 offer that all failed last month when Mr Murdoch’s US funder departed.
He then got backing from another US group, Providence Partners, but Mr Packer changed his side of the deal: no longer wanting a 50% stake, instead wanting to sell down to 25% and take around $700 million in cash from the deal.
Monday afternoon’s announcement of the withdrawal of Mr Murdoch’s private company, Illyria Pty Ltd, was made after CMH shares went into a trading halt in the morning.
Mr Murdoch said in a letter to CMH that Illyria was not in a position to proceed with the indicative proposal set out in a letter to CMH on January 21 "due to material changes in the overall transaction terms".
But he concluded by saying that he reserved the right to restart talks with Cons Media at any time.
Illyria, and CMH’s major shareholder, the Packer family’s Consolidated Press Holdings Ltd (CPH), made a non-binding indicative proposal in January to each take a 50-50 stake in the media investment company.
The price was to be around $4.06 cash and a percentage of the Seek Ltd shares that Cons Media owned. Cons Media holds a 27% stake in Seek and the deal would have seen that distributed to shareholders. Because of Cons Press’s 38% stake, it would have emerged with 10% of Seek and Mr Packer would have remained chairman of that company.
San Francisco-based SPO Partners & Co last month withdrew its financial backing for the proposal, leaving Mr Murdoch looking for new partners and an additional multi-million-dollar funding deal.
Mr Murdoch said on Monday that Illyria has "had success" in arranging equity funding but still withdrew on the deal. That is understood to have come from Providence.
Messrs Packer and Murdoch had offered a value of around $4.80 per share in the cash-and-Seek shares deal. And Mr Packer had not wanted to change that price. That’s understood to be the reason why the second version of the bid failed yesterday.
He had wanted $4.80 cash for his stake, while Providence had wanted to pay no more than $4.60.
That would have created problems because the first joint bid was described as non-binding and ‘final’ which means under Australian law it could not be changed, up or down, or the terms altered in any way.
Mr Murdoch was prepared to invest $50 million from reports, Mr Packer would stay in with 25% and Providence would put up around $2 billion. The banks, led by the ANZ, were to lend between $750 million and $800 million, based on the earnings and cash flow of Cons Media’s best asset, Premier Media (Fox Sports).
Mr Murdoch can return to the deal after July-August, if he wants another crack.
Cons Media has 25% of PBL Media – which owns Channel Nine, magazine business Australian Consolidated Press Ltd and a 50% interest in ninemsn and other websites.
CMH also owns 25% of Foxtel, 50% of Premier Media Group, which owns Fox Sports, and 27% of Seek Ltd.
