CanWest Global Communications has agreed to retain its controlling stake in Australia's third-largest broadcaster, Ten Network Holdings, after a six-month search for a buyer failed.
Ten said yesterday the Canadian firm would keep its 56 per cent stake by exchanging shares and convertible debentures in Ten Group intoordinary shares in the listed holding company Ten Network.
Shares in Ten, which targets 18-to-49-year-olds with programmes such as Big Brother and Australian Idol, fell 4 per cent on Monday on reports the sale had failed, and fell a further A3c to A$2.94 yesterday. CanWest earlier closed 2.1 per cent weaker at C$10.23 in Toronto.
Ten shares have now fallen around 18 per cent since peaking when the sale process started in January. The decline followed media reports which said the sale process may falter after private equity suitors dropped out and corporates like News Corp failed to lodge bids.
Analysts said CanWest, which had hoped to fetch up to US$1.7 billion by selling its stake, failed to find a buyer because of Ten's high valuation. Ten reportedly had offers no higher than A$2.90 per share.
However, an easing of Australia's media ownership laws earlier this year meant CanWest's restructure would open up capital management opportunities for Ten.
"If A$2.80 or A$2.90 was all that was on the table, then CanWest as an investor was probably better holding on to it," Commonwealth Securities analyst Craig Shepherd said.
"With the foreign ownership restrictions removed they have more flexibility to have a simpler ownership structure and to perhaps have capital management going forward."
CanWest previously had a 56 per cent economic interest in Ten, but only a 14.5 per cent voting interest because old laws stopped an overseas firm from holding more than 15 per cent of a television station. The proposed change of structure still requires foreign-ownership approvals.
Ten said the restructure meant it would have a market capitalisation of A$2.75 billion. It said CanWest indicated there was scope for "significant cash distributions" to Ten shareholders in the future.
