INM keeps door open for Australia deal after private equity talks fail

Independent News & Media hopes to resurrect a deal to buy out minority shareholders in the Australian newspaper group APN News & Media next year after it abandoned a potential £1.5bn offer when talks with its private equity backers broke down.

INM, publisher of The Independent, said it had ended talks on a leveraged buyout of Australia's fourth-largest media group after it was unable to finalise terms with the Rhode Island-based Providence Equity Partners and other private equity firms. "Discussions between the proposed consortium members have been terminated at this stage" the company said.

However, its statement left open the option of a renewed bid for APN with new private equity partners early next year. Ted Harris, deputy chairman of APN, said: "We will continue to examine opportunities, including further discussions with INM, for the benefit of all APN shareholders."

INM already holds 41 per cent of APN, which owns newspapers in Australia and New Zealand and runs 125 radio stations in partnership with the US radio company Clear Channel Communications. The deal was to be structured so that the private equity company purchased APN while INM retained its stake and took over the running of the business. The highly leveraged nature of the deal would free up cash on Ireland-based INM's balance sheet to fund further international expansion. Analysts expect INM to strike a deal with new private equity partners.

Barry Dixon, an analyst with Davy Stockbrokers in Dublin, said he expected INM to renew its efforts in the new year and said that other bidders were unlikely given its existing stake.

The Australian media sector is rife with private equity interest ahead of an easing of media ownership regulations that are set to come into effect next year. The new laws will also relax foreign ownership restrictions.

INM said it would "continue to actively examine the many opportunities in the Australian market" in conjunction with APN.

Last week the US private equity company Kohlberg Kravis Roberts paid A$4bn (£1.6bn) for a 50 per cent stake in Seven Network's broadcasting and publishing assets. That followed CVC Asia Pacific's A$4.5bn acquisition of a 50 per cent stake in the media assets of Publishing & Broadcasting, the media empire of the late Kerry Packer.

In October Rupert Murdoch's News Corp bought a 7.5 per cent stake in Australia's second-largest media company, John Fairfax Holdings.