Boardroom split over media takeover
By Chris Hutching
Longtime directors in the country's second-largest private radio company have been personally pitted against one another in the battle for control of the company.
A takeover bid by Canadian-owned corporate raider CanWest Global Communications stalled at 70% mid-week as resistance galvanised around five RadioWorks directors.
RadioWorks chairman Derek Lowe accepted CanWest's $8.25 a share offer and sold his 5% stake for $3 million, triggering a flood of sales including 12% held by the TAB.
CanWest had 70% of the shares by mid-week.
But RadioWorks director Steven Joyce, for many years Mr Lowe's right-hand man, has led resistance to the CanWest raid.
He and fellow directors Norton Moller and John Armstrong own 9.5% of the shares through Energy Nominees.
Two other directors, Walter Rutherford and Colin Giffney, were also holding out.
Collectively the directors hold a block of about 13% of the RadioWorks shares. On Tuesday they sought a verbal valuation from Grant Samuel and were told the fair price for full control might be closer to $10 a share.
They issued a don't-sell notice to shareholders and CanWest responded with an ultimatum. It said on Wednesday it would seek 75% of the shares and the offer would close at the end of trading on Thursday.
According to CanWest's Radio Group chief executive Brent Impey, both companies had been considering merger talks for some time.
Last week CanWest bought 19.9% from NZ Funds Management and Arcus Investment Management and a subsequent stand in the market last week proved more attractive than anticipated.
"What changed things significantly was the chairman's sale of his shares. That caused retail investors to sell and before we knew it we had 44%. Then the TAB sold and we soon went to 70%. At that stage we hadn't formulated a business plan to integrate the businesses of CanWest and RadioWorks. Events created a certain momentum," Mr Impey said.
Mr Impey said CanWest might still go to 100% but only at $8.25, which he said was a 23% premium to the earlier prevailing share price.
"If they don't want to sell and want to sit at 75% we want to sit down with the existing board and management and work with them as partners.
"The two businesses we have here are still smaller than our main competitor, The Radio Network, in revenue terms. But there are several neat fits. RadioWorks has four networks and a series of provincial stations. We have metropolitan stations only, which are More FM, the Breeze and Channel Z."
Mr Impey said he was well aware of the obligations of both companies to their respective shareholders, particularly the minority RadioWorks shareholders who would continue to be represented on the board.
CanWest had also written to the Commerce Commission advising that its holdings remained within Commerce Act dominance thresholds in all but one market, Mr Impey said. CanWest also owns TV3, TV4 and the More FM radio group. It has gained Overseas Investment Commission approval to buy RadioWorks
RadioWorks was formed only last year when Radio Otago and Radio Pacific were merged and senior executives of the companies became directors of RadioWorks. The aim was to form a radio network block that could take on foreign-owned CanWest, and The Radio Network. Soon after the merger, a long-standing Radio Otago shareholder, Dunedin publisher Julian Smith through Allied Press, sold his stake for about $12 million. The former Radio Otago chairman of 28 years, John Farry, said he felt a twinge of regret RadioWorks was now coming under overseas control but the issue no longer seemed as significant as it once had.
Mr Lowe said that while RadioWorks had prided itself on being one of the few remaining New Zealand-owned media companies he believed foreign ownership was no longer a public concern.
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