Quebecor Acquires Sun Media - Creates New National Newspaper Chain.
The price offered is $21.00 per share all cash and represents a premium of 112 percent over the closing price of Sun Media shares on October 28, 1998.
Quebecor and Sun Media have entered into a Pre-Acquisition Agreement dated December 9, 1998 pursuant to which Quebecor has agreed to make the offer and the board of directors of Sun Media has undertaken to recommend to its shareholders acceptance of the Quebecor offer and, if requested by Quebecor, to waive the application of Sun Media's Shareholders Rights Plan.
The Pre-Acquisition Agreement further provides that the Company shall not, directly or indirectly, solicit or encourage any competitive offer from any person.
The Quebecor bid arises from the efforts of the Sun Media board of directors and its Special Committee to maximize shareholder value in response to the unsolicited offer made on October 28, 1998 by Torstar Corporation.
"We believe that the Quebecor bid provides Sun Media shareholders with an attractive opportunity to achieve fair value for their shares," said Sun Media's Chairman, Clare R. Copeland.
Quebecor has entered into Lock-up Agreements with a number of institutional and management shareholders pursuant to which such shareholders have irrevocably agreed to tender their common shares representing approximately 34 percent of all outstanding common shares.
In addition, Quebecor and its affiliates currently hold approximately 9.5 percent of the outstanding common shares. These common shares combined with the common shares subject to the Lock- up Agreements represent more than 43 percent of the outstanding common shares.
The Quebecor offer, which will be subject to customary conditions including the condition that 66 2/3 percent of the common shares of Sun Media (on a fully diluted basis) be tendered thereunder, will be mailed to shareholders no later than December 18,1998.
"The acquisition of Sun Media by Quebecor is a major step forward for Canadian publishing," said Paul Godfrey, President and Chief Executive Officer of Sun Media and the new chief executive of the merged publishing company. "This is a wonderful winning combination that will give us daily newspapers in 10 of the top 11 markets in Canada. The Sun tabloids in Toronto, Edmonton, Calgary and Ottawa combined with the Journal de Montreal, Journal de Quebec and the Winnipeg Sun plus our broadsheets in London, Hamilton and Kitchener-Waterloo will create a national chain and lead to the opening of new choices for advertisers as well as improved quality of content and efficiencies."
Charles G. Cavell, the newly merged publishing company's chairman said, "We have won the market leadership position with our tabloids in the province of Quebec. Our historic markets and our developed expertise when combined with the markets and strengths of Sun Media will make for a winning team. We are pleased that Paul has agreed to head the new national company. We expect to establish an operating committee with expertise from both founding companies to realize the full potential of the new company. Ten urban dailies, nine community dailies, 152 weeklies and 19 other publications will make up this new force in the Canadian media mosaic. Hopefully, we will demonstrate over time that this major move is only the first step in the creation of a major publishing entity with Canadian roots!"
The merger of Quebecor and Sun Media is a positive development for competition in the Canadian newspaper industry. The newly merged entity is the second largest newspaper chain in Canada with 25.4 percent market share. However, it is believed that there are no competition concerns with the Quebecor acquisition as there is no overlap in the businesses of the two corporations.
Quebecor and Sun Media believe the creation of a new national chain of tabloid newspapers will offer advertisers a wider choice of access to an underserved segment of the Canadian community. There will also be no overlap of classified and local retail advertising sales, an important issue in concentrated markets such as Toronto.
In addition, with the fusion of Sun Media subsidiary CANOE and Quebecor subsidiary Quebecor Multimedia, the merged company has a solid foothold in new technology that will allow the national chain's publications to deliver powerful internet solutions.
Pierre Karl Peladeau, Vice Chairman of Quebecor and of the newly merged publishing company concluded, "It has long been the strategy of Quebecor to create a company with a strong Canadian foundation from which it could grow internationally to meet the challenges of globalization.
Like our sister companies Quebecor Printing and Donohue, the Sun Media acquisition is the next important step in the development of another Canadian success story.
Sun Media is the second largest daily newspaper publishing group in Canada in terms of circulation and currently publishes seven daily newspapers in major urban centres in Canada (The Toronto Sun, The Edmonton Sun, The Calgary Sun, The Ottawa Sun, The London Free Press, Kitchener-Waterloo's The Record and The Hamilton Spectator).
Sun Media's Community Newspaper Group, Bowes Publishers Limited, publishes seven daily community newspapers, 96 weekly community newspapers and shopping guides in Canada and in Florida and 19 farming and other specialty publications.
The Company also has a New Media Group which is comprised of its controlling 60 percent interest in the CANOE (Canadian Online Explorer) portal site and network of online products and its 29.9 percent interest in CP24 (CablePulse24), Canada's only 24-hour local news station, based in Toronto.
Quebecor Inc. is a communications holding company with anticipated 1998 revenues of over $8 billion. With business activities spread throughout North America, Europe, South America and Asia, the Company operates in five main sectors.
The Company has publishing (including distribution and retail), broadcasting and multimedia activities through its wholly-owned subsidiary Quebecor Communications Inc. Through its subsidiary Quebecor Printing Inc., it ranks as the largest commercial printer in Canada and one of the largest in the United States, Europe and South America.
Through its subsidiary Donohue Inc., it is a major integrated forest products company engaged in forest management to ensure its fiber supply, and in the manufacture and sale of newsprint, specialty papers, market pulp and wood products. Quebecor employs more than 39,000 persons in 14 different countries.
The Class A Multiple Voting Shares of Quebecor Inc. are listed on the Montreal and Toronto stock exchanges under the ticker symbol QBR.A and on the American Stock Exchange under the ticker symbol PQB. Its Class B Subordinate Voting Shares are listed on the Montreal and Toronto stock exchanges under the ticker symbol QBR.B.
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|Date:||Dec 9, 1998|
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