The new bid from Jordan Bitove and Paul Rivett, the entrepreneurs behind NordStar, has the support of Torstar’s board of directors, the voting trust of five families who control the Star’s A-class shares, as well as Fairfax Financial, the biggest holder of B-class shares, with roughly 40 per cent.
Under the terms of the revised bid, those agreements are “hard lock-ups,” meaning the voting trust and Fairfax can’t change their votes to support any other bid, a source said. That means the bidding war is effectively over.
“I’m beyond excited, humbled and really looking forward to the Star being around for the next 100 years,” said Bitove, who has vowed to keep the Star’s progressive Atkinson Principles intact.
The improved NordStar bid had the unanimous support of the Torstar board — meaning board member Martin Thall, who had held out for a higher offer after NordStar’s previously-announced $52 million, has decided to support the new bid.
The new offer was not expected until early next week and tops a rival offer from the Canadian Modern Media Holdings group, which includes Matthew Proud, CEO of Dye & Durham Corp., his brother Tyler Proud, CEO of technology company Avesdo Inc., finance industry veteran Neil Selfe and former Ontario finance minister and Ontario Liberal Party president Greg Sorbara.
A disappointed Selfe said he and the Prouds had been prepared to offer more.
“Our financing was firm, we would have been able to meet their timelines, and we were prepared to offer much more money,” said Selfe.
The Proud-Selfe offer also included so-called “contingent value rights” on top of the $58 million.
While the Proud-Selfe team didn’t publicly reveal where they were planning to get financing for their bid, sources say it was Canadian Western Bank. The team had not yet made their bid official and were facing a deadline of Monday at 5 p.m. to do so.
A July 21 meeting where shareholders are being asked to vote on NordStar’s offer is scheduled to go ahead.
The deal is contingent on getting a majority of votes from A-class shareholders and B-class shareholders, as well as 66 per cent of the votes from both classes added together. The lock-up agreements mean the first two conditions are guaranteed to be met.
The deal is expected to officially close July 28 and Bitove and Rivett have said they intend to take Torstar private.
Bitove said that when they take ownership, he and Rivett will stand by their earlier commitment to support the progressive journalism the Star is known for. The two previously announced that they will bring former Ontario Liberal Premier David Peterson on board and intend to make him vice-chair once the takeover is complete.
“We are committed to the Atkinson Principles, the Toronto Star and excellent journalism,” Bitove said.
The latest bid still values the company at less than the $69 million in cash Torstar had on hand at the end of the first quarter. Torstar was also debt free.
The Proud brothers’ offer was worth 72 cents per share, while Bitove and Rivett’s offer had been worth 63 cents per share before they raised it to 74 cents this weekend. Bitove and Rivett initially offered 56.6 cents per share, but that offer was rejected by Torstar’s board. Their 63-cent offer was made public in late May after being recommended by the board.
Torstar shares closed at 71 cents per share Friday, down one cent on the day.
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