The broadcasting operations of John Labatt Ltd. have been sold to a management consortium that includes ESPN in an all-cash deal valued at C$605 million ($445 million).
Led by Gordon Craig, who founded the Sports Network (TSN) in Canada more than a decade ago, the consortium won the bidding war despite higher bids from two other companies.
Interbrew SA, the Belgian brewer that bought Toronto-based Labatt in a friendly $1.9 billion takeover, wanted to sell the broadcasting assets before its own deal closes July 27.
Interbrew will keep Labatt’s brewing arm and sell off the rest, including Canada’s Discovery Channel, post-production house Dome Prods., 25% of the Viewer’s Choice pay-per-view service and 35% of interactive TV company NTN Canada.
LCI chairman Craig assembled a consortium made up of Claridge Inc., a Montreal-based Bronfman family management company, which took a 28.6% equity stake; Reitmans (Canada) Ltd., a Montreal retail clothing company (21%); the Caisse de Depot et Placement du Quebec, the Quebec government fund manager (28.6%); ESPN Inc. of New York (20%); and Craig, who along with his managers holds the balance.
ESPN was limited by Canadian ownership restrictions that limit foreign equity in Canadian broadcasting companies to 20%.
Alliance Communications Corp. of Toronto and Winnipeg-based CanWest Global Communications Corp. are believed to have put in higher bids, but with strings attached. Baton Broadcasting Inc. of Toronto and Astral Communications Inc. of Montreal also were in the running. But the LCI group was said all along to have the inside track.
“It really was the best offer,” said Interbrew spokesman Bruce MacLellan.
The Bank of Nova Scotia will provide financing, estimated to be more than $294 million.
Sources said Interbrew accepted the lower bid in the belief that the Canadian Radio- Television & Telecommunications Commission will look more favorably on a buyer who knows the business.