INM shares gain as company confirms approaches for APN

Shares in Independent News & Media (INM) gained yesterday after the company said it had received approaches for its stake in Australasian business APN News & Media.The company said in a statement that it had received a number of unsolicited expressions of interest in its 39.1pc stake in APN, and that it had informed the group of its intention to sell that stake -- the proceeds of which would be used mainly to reduce INM's debt. The market responded favourably to the news, as it did to an interim trading statement from the company which outlined cost-cutting plans. Shares in INM finished up 28pc and 27pc at 64c in Dublin and London respectively.According to INM, the move to sell the stake in APN News & Media could reduce the company's debt by about €800m, deleveraging the business to less than €600m.The company, which publishes this newspaper and has interests in India and South Africa, has hired Goldman Sachs, in association with ANZ Mergers & Acquisitions, as advisors on any potential deal. APN publishes 23 daily and more than 100 non-daily newspapers across Australia and New Zealand. It also has radio and outdoor advertising assets. Shares in APN were at A$2.35 yesterday, giving the company a market capitalisation of A$1.23bn, while the 52-week high for the stock was A$5.85, valuing the firm at A$2.9bn.In a statement issued yesterday, INM said: "The board of INM believes that APN's current share price does not reflect the inherent value of the underlying assets and the position of APN as a leading media company in Australia and New Zealand. "Moreover, this strategic value has not been fairly reflected in INM's share price, due primarily to the fact that INM doesn't fully control APN's cash flows."Davy Stockbrokers, INM's broker, said in a note yesterday that interest in the company was likely to have come mainly from trade buyers.It added that the main benefit of the sale was that net debt would be substantially reduced. "In summary, we think the APN deal should be a smart one for INM, simplifying and strengthening the business, and clearly beneficial for debt reduction and cash flow."The statement from the company added that the board believed the significant proceeds receivable from monetising its shareholding in APN would substantially enhance INM's balance sheet and would be earnings neutral for 2009. The move would also free cashflow."The board believes that the proceeds could be better utilised for the benefit of all of its shareholders by substantially lowering INM's net debt, with subsequent flexibility to assess other global investment opportunities."INM is 29.5pc owned by Sir Anthony O' Reilly and associated parties. Businessman Denis O'Brien, who owns 26pc of the firm and has been branded a "dissident shareholder", has criticised the plan and said yesterday that the company should be disposing of non-performing UK assets. "I, like all shareholders, shall be watching closely to see what valuation can be achieved for this attractive asset," added.In its interim management statement, INM said it would look at cost savings at its UK business, which includes London's 'Independent' and The 'Independent on Sunday'. The company is exploring "shared-services" plans with other UK publishers. "Total payroll costs across the group are currently under active review," according to the statement. INM's interim management statement also outlined a predictable advertising slowdown, but highlighted the group's resilience. INM said 2008 revenue would probably fall 2pc, excluding currency fluctuations, and would decline marginally in 2009. Advertising revenues would fall 2.5pc this year in constant currencies. "The current volatile nature of global financial and economic markets makes it extremely difficult to reliably forecast for 2009," INM said. There may be "some growth towards the second half of 2009".- Ailish O'Hora Business News Editor Download our iPhone App Now