KEY POINTS:
Canwest MediaWorks shareholders have a choice.
Do they take the money and run or do they try to go along for the ride in a private equity investment on Ironbridge's coat-tails?
On one level the $2.43 a share offered by Ironbridge looks like a pretty good price. It
is - as Ironbridge will be reminding shareholders - nearly 50 per cent above where CanWest was before it was put on the market seven months ago.
Depending on who you speak to, Ironbridge is paying between 11 and 12.5 times CanWest's forward earnings before interest, tax, depreciation and amortisation, valuing the business at $727 million, including debt.
That compares with a more generous average multiple of around 12.8 times earnings in the flurry of media transactions in Australia over the past year.
Some CanWest shareholders will argue that as one half of a radio and TV duopoly, CanWest should be attracting a higher price than media assets in the more fragmented Australian market.
Private equity firms usually hate getting stuck with a listed company and the regulation and scrutiny that goes along with it, which is why they rarely undertake takeovers and risk not getting full control.
But Ironbridge and its adviser on the deal, ABN Amro, will have done the sums. They'll be confident Ironbridge can make a good return whether it owns 70 per cent, 80 per cent, or the whole lot.
And this is where some CanWest shareholders will see an opportunity to get a free ride in a private equity investment. Just as they did when they bought local rubbish company Envirowaste last year, the first thing Ironbridge will do will be to try to secure the current management - the well-regarded CanWest chief executive Brent Impey and his team.
Next, they'll load up the business with debt, as private equity funds are wont to do, and might scare off some investors as a result.
Then comes the question of how Ironbridge can boost CanWest's earnings growth. CanWest is run on the smell of an oily rag, so there's not much fat to cut.
Does Ironbridge just keep the business running pretty much as it has been, chipping away at TVNZ's audience share and growing as the economy grows?
Or does it have more radical plans? Certainly Ironbridge has shown it's not averse to further investment in its assets if there's a return to be made - as it has by expanding Qualcare, the New Zealand retirement homes business it bought 18 months ago.
Either way, some shareholders will look at the examples of Metlifecare and Toll New Zealand - companies that have given fantastic returns for minority shareholders after takeovers - and decide to hang on.
