Move thought to center on increasing company's non-voting stake
TORONTO — In an all-or-nothing gamble by one of Canada’s media giants to gain control of another, CanWest Global has launched a C$650 ($457 million) takeover bid against Vancouver-based broadcaster Western Intl. Communications.
The move comes in the wake of the sale earlier this month by Emily Griffiths, widow of WIC’s founder, of her controlling interest in the company to two other media interests: Calgary-based Shaw Communications Inc. and the Allard family of Edmonton. The $64 million deal gives Shaw and the Allards 49.9% each of WIC’s voting shares.
It also leaves out in the cold CanWest and its outspoken founder Izzy Asper — which has a 30% equity stake in the company in the form of non-voting B shares but less than 1% of the company’s voting A shares.
Winnipeg-based CanWest’s unconditional $27-per-share cash offer for either voting or non-voting shares of WIC is a counterstrike. It is unlikely that either Shaw or the Allards will accept CanWest’s offer. It is thought, instead, that CanWest’s goal is to increase its ownership of non-voting class B shares. CanWest also purchased 1.5 million non-voting class B shares on Monday, increasing its equity holdings to 34%.
At issue is WIC’s so-called coattail provision, which states that non-voting B shares convert to voting stock when one group has more than 50% of the company. WIC contends the coattails have not been triggered by the Griffiths sales, while CanWest says that they have.
A conversion of non-voting shares into voting shares will have CanWest and Asper, who is said to have had his eye on WIC for some years now, back in the game. This is CanWest’s second hostile takeover attempt of WIC in 2-1/2 years.
CanWest Global Communication owns and operates television and cable networks in Canada, a TV and a radio network in New Zealand, as well as TV interests in Australia, Ireland and Northern Ireland.
WIC owns nine television and 12 radio stations, is a pay TV licensee and a holder of telecommunications and satellite network services in Canada.