IT'S OFFICIAL--CHUM AND BELL GLOBEMEDIA ANNOUNCE TAKE-OVER OFFER FOR CHUM
CHUM Limited and Bell Globemedia Inc. today announced that BGM, through a corporation owned by its current and prospective shareholders, has agreed to make an offer to acquire all of the issued and outstanding common shares ("Common Shares") and non-voting Class B Shares ("Non-Voting Class B Shares") of the Company at a cash price of $52.50 per Common Share and $47.25 per Non-Voting Class B Share (the "Offer"). The cash consideration represents a 50.0% premium over the 10-day weighted average trading price of the Common Shares and a 57.0% premium over the 10-day weighted average trading price of the Non-Voting Class B Shares, in each case as of July 11, 2006. The Offer establishes a $1.7 billion enterprise value for the Company.
CHUM has entered into a support agreement with BGM which provides that, subject to certain terms and conditions, the Company will support the Offer.
The Estate of Allan Waters and various related entities, which are the Company's controlling shareholders, have entered into a lock-up agreement with BGM which provides that, subject to certain terms and conditions, they will deposit all of their Common Shares and Non-Voting Class B Shares to the Offer. They own a total of 5,981,015 Common Shares, representing approximately 88.6% of the outstanding Common Shares, and 2,812,118 Non-Voting Class B Shares, representing approximately 13.2% of the outstanding Non-Voting Class B Shares.
The Offer is a result of a sale process conducted by Blair Franklin Capital Partners acting on behalf of the Company's controlling shareholders. BGM was approached as part of this sale process.
Both the Company's support agreement and the controlling shareholders' lock-up agreement permit the board of the Company and the controlling shareholders to accept a superior proposal to the Offer if BGM fails to match the superior proposal after three business days, subject to payment by the Company of a $41 million fee to BGM.
A special committee of independent directors, created by the Company's Board of Directors, and comprising Gordon Craig (Chair), Denise Donlon, Larry Lamb and Fred Sherratt (the "Special Committee"), has reviewed the Offer in consultation with its independent legal and financial advisors. In that regard, the Special Committee has received an opinion from its financial advisor, CIBC World Markets Inc., that the consideration under the Offer is fair from a financial point of view to the holders of the Common Shares and Non-Voting Class B Shares. The Special Committee has unanimously recommended the Offer to the Company's Board of Directors, and those members of the Board of Directors entitled to vote unanimously recommend that shareholders tender their shares to the Offer.
"In Bell Globemedia's offer, we not only found value for shareholders, but confidence that we would be placing CHUM in the hands of an owner with the financial resources and track record to continue to grow and build on our collective legacy," said Jim Waters, Chairman, CHUM Limited.
BGM President and Chief Executive Officer and CEO of CTV Inc. Ivan Fecan said: "We are able to make this premium offer because Bell Globemedia is clearly the most logical buyer of CHUM. There is a unique strategic fit to our operations that can make the united company a stronger national champion in broadcasting. We intend to maintain and build the valuable CHUM brands and develop more opportunities for Canadian programming."
"The Waters family has built a remarkable organization and our intention is to continue their legacy," Mr. Fecan added. "With regulatory approval, we intend to serve Canadian audiences with both CTV and Citytv stations. We will maintain separate and independent news divisions in order to ensure a continued diversity and competition in news coverage. The specialty television channels of the two companies are complementary and we are excited by the prospects of adding CHUM's strong radio stations to our services."
"Today's announcement provides for a strong future for the stations, brands and innovative content that CHUM delivers to audiences from coast to coast," said Jay Switzer, President and Chief Executive Officer, CHUM Limited. "CHUM and BGM have historically been complementary - both share a passion for excellence and each serves Canadians in its own way. Together, we will have the creative and financial strength to ensure a strong Canadian presence in the rapidly evolving media landscape."
BGM expects to mail a take-over bid circular shortly. The Offer will be conditional on, among other things, there having been validly deposited under the Offer at least two-thirds of the outstanding Common Shares and receipt of clearance under the Competition Act (Canada). Under the Offer, BGM expects to take up and pay for any and all tendered Non-Voting Class B Shares, but the Offer is not subject to any minimum tender condition in relation to such shares and there are no coat-tail provisions applicable to such shares. If sufficient shares are tendered to the Offer, BGM has agreed with CHUM to use commercially reasonable efforts to acquire the remaining shares by way of a subsequent acquisition transaction at the same price as is available under the Offer.
Pursuant to a previously announced reorganization of BGM's ownership which is subject to the receipt of required regulatory approvals, Ontario Teachers' Pension Plan Board and Torstar Corporation will become shareholders of BGM along with BCE Inc. and The Woodbridge Company Limited. The Offer will be made through a corporation owned indirectly by BGM's proposed reorganization shareholders.
Any Common Shares taken up under the Offer will be placed in the hands of a trustee pursuant to a voting trust agreement approved by the Canadian Radio-television and Telecommunications Commission ("CRTC"). Pursuant to this voting trust agreement, control of the Company will reside with the trustee pending consideration by the CRTC of BGM's application for approval to control the Company. BGM expects that the A-Channel and Access Alberta television stations will be divested which would leave the combined conventional operations of BGM and CHUM with the same number of over-the-air networks as the principal competitor in most markets.
Merrill Lynch and TD Securities Inc. are the financial advisors to BGM in connection with the Offer. |