LONDON (Brand Republic) – Hollinger International, owner of the Telegraph Group, is selling the majority of its Canadian newspaper business in a deal valued at £1.6bn.
CanWest Global Communications, Canada’s third largest broadcasting group, will acquire all Hollinger’s daily papers and related websites, its magazine group and most of its community newspapers. It will also gain control of 50% of the National Post in Toronto, although Hollinger will continue to manage the paper and, under certain circumstances, be able to buy back the stake after five years.
Hollinger’s share price rose $1.75 (116p) to $16 in New York yesterday. The company’s Canadian assets account for half of its profit. Before the deal, investors had raised concerns including its corporate structure, the effect of rising newsprint prices and internet competition.
Hollinger decided to sell its publishing assets in April, as it looked to strengthen its share price and pay off some its $1.7bn debt.
CanWest will pay £931.7m in cash, £270.2m in shares and £315.3m in 10-year debentures. The deal makes it CanWest’s second largest shareholder and gives it two executive seats on the board, one of which will go to Conrad Black.