Carlyle joins offer for APN

Private equity firm Carlyle has teamed up with rival Providence Equity Partners and trade buyer Independent News & Media to make a fresh approach for APN News & Media. Their cash offer of A$6.05 a share values the latter company at A£3.8bn (€2.26bn).

Irish group Independent News & Media, which publishes the Independent newspaper in London, originally attempted to purchase Australian rival APN last October. However, it withdrew this bid, made in conjunction with Providence, on November 24.

Independent already owns 42% of the company, which is the largest radio broadcaster in Australia and New Zealand and the third largest newspaper publisher. The bidder said it would “reinvest a significant part of its likely proceeds from the consortium’s offer, so that it remains the largest shareholder in APN”.

The decision by Carlyle to help Independent News & Media buy out its Australian partner is a rare example of a leading private equity firm teaming up with a trade buyer.

These sorts of arrangements are more likely to happen in the media sector than elsewhere. Most countries have particular rules regarding the ownership of media assets, to prevent the dominance of any one voice.

Australia has just relaxed its ownership rules, prompting a whole swathe of such joint venture deals.

Last October, Rupert Murdoch’s News Corp bought a 7.5% stake in fellow newspaper publisher John Fairfax for US$272m. And Citigroup and CVC Asia teamed up to buy half of the Packer family’s media vehicle Publishing & Broadcasting for US$3.4bn.

In the same month Independent first unveiled its plans for APN, putting forward Providence Equity as its sole partner. However, the duo failed to agree terms. It appears that Providence is back on the deal sheet because Independent had sounded out Carlyle.

Independent may be retaining a 42% stake in APN but it is unlikely that Providence and Carlyle will be completely passive investors. Extracting themselves from such an investment will remain their overriding purpose. That may prove harder with a trade player as a partner than one where all investors are private equity firms.