Competition watchdog approves INM's Celtic Media deal
Published 11/11/2016 | 02:30
The Competition and Consumer Protection Commission has approved the acquisition of the Celtic Media Group of local newspapers by Independent News and Media (INM) plc.
The CCPC (formerly the Competition Authority) ruled yesterday that "the transaction would not lead to a substantial lessening of competition" in the areas of business concerned.
The proposed deal will see Independent News & Media Holdings Ireland Limited (INM Holdings), a wholly owned subsidiary of INM, acquire the entire issued share capital of CMNL Limited (CMNL).
CMNL owns seven regional newspapers, including the 'Anglo-Celt' in Cavan, the 'Meath Chronicle', and the 'Connaught Telegraph'.
The proposed acquisition by INM, which publishes the Irish Independent, and 'Sunday Independent', as well as a number of local newspapers including the 'Fingal Independent', 'The Kerryman' and the 'Sligo Champion', is subject to approval by Minister for Communications Denis Naughten.
He must assess - under legislation governing media takeovers - whether the deal has implications for media plurality.
The National Union of Journalists (NUJ) had opposed the move and claimed INM should not be allowed to further expand its newspaper stable.
The CCPC said its investigation identified four distinct product markets in which the businesses operated.
These markets are newspaper publishing (which includes advertising and readership); pre-press services to local/regional publishers; printing services to local/regional publishers; and the distribution of local/regional titles.
The CCPC said its analysis involved in-depth economic assessment of the affected markets, consideration of detailed submissions from the parties involved, as well as consultations with competitors of the merging parties and other third parties. "The CCPC concluded that, although both INM Holdings and CMNL are involved in publishing local/regional newspapers, there is very limited overlap between their activities and the transaction would not lead to a substantial lessening of competition in any of the product markets mentioned above," said the commission.
"Following the determination by the CCPC, the parties must submit a separate notification to the Minister for Communications, Climate Action and Environment. Section 28 of the Competition Act 2002 sets out the process by which the Minister for Communications (and, where applicable, the Broadcasting Authority of Ireland) will assess the merger separately in relation to media plurality".
Separately, INM will hold an extraordinary general meeting in Dublin on December 5, to seek shareholder approval for a planned capital restructure.
Shareholders will be asked to vote on two proposals to facilitate the restructuring of the balance sheet: a capital reduction and a cancellation of authorised Deferred Shares.
Once approved, INM will apply to the High Court for permission to restructure. In a note to investors, Davy Research analyst Robert Stokes said that if the special resolutions are approved, INM will strengthen its balance sheet and open up the possibility of paying a dividend on future profit post the restructuring.
"This process will strengthen INM's balance sheet and enhance its capital allocation options," said Mr Stokes following a notification to the stock exchange by INM.
"INM will no longer be restricted from paying a dividend. With a free cash flow yield of 16pc, a progressive dividend policy could provide investors with an attractive dividend yield if implemented."