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Torstar Corp., one of Canada’s largest newspaper conglomerates, on Thursday confirmed the receipt of an unsolicited second bid from a group of private investors after media reports emerged late Wednesday evening that former technology sector investors Matthew and Tyler Proud, along with Bay Street veteran Neil Selfe, had made a bid for the ailing company.
The second bid comes just weeks after entrepreneurs Jordan Bitove and Paul Rivett announced their intention to purchase the company for $52 million through NordStar Capital LP. Shareholders are set to vote on that bid on July 21.
Torstar’s stock was halted Thursday morning in response to a request from the Investment Industry Regulatory Organization of Canada (IIROC). Torstar later that afternoon acknowledged in a press release that the bid could lead to a “superior proposal” compared to Nordstar’s offer for the company, implying the per share amount to purchase could be higher, as stated in media reports.
The Proud brothers and Selfe are reportedly offering 72 cents per share to buy the company, according to the Globe and Mail, a 14-per-cent premium to NordStar’s offer of 63 cents per share.
Neither the Proud brothers or Selfe responded to requests for confirmation that they are the second bidders.
Torstar said its board is “engaging in discussions and negotiations” with the second bidder, but continues to urge shareholders to vote in favour of the Nordstar deal. Under the terms of the first proposal, Torstar reserves the right to accept a higher bid if Nordstar does not match the better offer.
In addition, the terms dictate that Torstar would have to pay Nordstar up to $3.5 million if it terminates the deal to accept a better offer.
In a statement provided to the Financial Post, a Nordstar spokesperson said the newly formed entity would not “comment on rumour or speculation” and it had no plans to increase its $52-million bid.
“Our bid for Torstar fully values the company given the significant expenses that will need to be incurred to ensure the growth and prosperity of the flagship Toronto Star and community newspapers,” the statement read.
TorStar reported a net loss of $23.5 million at the end of the first quarter of 2020, and a cash balance of almost $70 million, about 34 per cent more than what NordStar is offering to take the company private.
For years, Torstar has attempted to boost digital subscriber revenue as it transitioned away from print, but those efforts have not succeeded. Print and digital subscriber revenue grew by just 0.31 per cent in the last quarter of 2019, compared to a year prior. The pandemic has accelerated the decline in both print and digital ad revenue even further.
Torstar shares shot up 15 per cent to 71 cents after trading resumed this afternoon.
Torstar spokesperson Bob Hepburn said the company would not be making any comment on the second bid beyond what was said in Thursday’s press release.