Hollinger Gains Control Of Southam p.12

By: MARK FITZGERALD HOLLINGER INTERNATIONAL INC. gained outright control of Southam Inc. with a sweetened offer for shares of the big Canadian newspaper chain.
Hollinger International said Nov. 29 that it received tenders of approximately 1 million more shares in Southam than it needed to achieve majority ownership. The company, the Chicago-based unit of Conrad Black's Hollinger Inc., said it will purchase 8 million Southam shares for C$160, or approximately U.S.$118.9 million.
In its campaign to control Southam outright, Hollinger International twice increased its offering price.
Hollinger International announced Nov. 13 it would offer C$20, or about U.S. $14.80, per share of Southam, up C$1.25 from its Oct. 24 offer of C$18.75 a share.
Last May, Hollinger began its drive to take control of Southam by paying C$18 a share for the 20% block of stock owned by Power Corp.
Hollinger International needed to buy approximately 7 million shares to increase its stake in Southam from 41% now to 50.1%.
With the 8 million shares in hand, Hollinger and Hollinger International's stake in Southam will increase to 50.7%.
Gaining majority control means Hollinger International can consolidate Southam's financial results with its U.S. and overseas newspapers. The Chicago Sun-Times is Hollinger International's U.S. flagship.
The campaign proved successful after Southam's independent directors backed Hollinger International's new offer.
"The special committee of independent directors of Southam considering the offer has been advised by RBC Dominion Securities that the $20 per share price is fair from a financial point of view.
"The special committee intends to recommend that Southam shareholders accept the offer," the committee of independent directors said in a statement.
Hollinger apparently also acceded to another request of the independent directors.
For one thing, it has agreed that if more than 7 million shares are tendered, it will buy only up to a limit of 8.5 million shares.
If it decides to buy more shares than that, Hollinger said, it will give shareholders formal notice of the maximum number it plans to buy.
Though it was not yet the majority owner of Southam, Black has effective control of the chain since May ? and has wrought many changes at Canada's biggest single newspaper publisher. He increased the number of dailies Southam owns from 20 to 32 and he has sold off C$300 million in assets. Black, now Southam's chairman and chief executive officer, has replaced five independent directors since increasing his stake in May.
However, as long as he does not own a majority of stock, a 1993 agreement requires the majority of directors be independent.
Through Southam and his other properties, Hollinger owns or controls 59 of Canada's 105 dailies, the Canadian Press noted in a recent wire story.