Independent News & Media (IN&M) has agreed to sell its stake in the mobile content provider iTouch for €100 million cash, with the proceeds to be reinvested in its various newspaper titles and potentially to pay down debt.
The Japanese company For-side, which provides ring tones and games for mobile phones, is buying the stake as part of an overall takeover bid for iTouch.
For-side is prepared to pay a 27 per cent premium on the current iTouch share price, brokers noted yesterday. IN&M is selling its 37.44 per cent stake for 44p a share.
Several leading IN&M executives also stand to benefit from the sale.
According to the iTouch annual report, three IN&M directors - Ivan Fallon, Brendan Hopkins and Gavin O'Reilly - have iTouch shareholdings.
Based on a 44p offer, IN&M UK chief executive Mr Fallon, who holds 100,000 iTouch shares, stands to make a gain of £44,000 (€67,118). Mr O'Reilly, IN&M chief operating officer, holds 142,857 shares and stands to gain £62,857, while Mr Hopkins, chief executive of APN News and Media, holds 274,285 shares and stands to gain £120,685.
IN&M said the proceeds of the sale would be used for "general corporate purposes" and to "further enhance the group's market-leading publishing brands".
However, if the proceeds are set against the company's debt, the interest savings for 2005 are estimated to be about €5 million, said Bríd White of Merrion Stockbrokers yesterday. She said she was increasing her earnings per share forecast by about 4 per cent on the back of the transaction.
"The company's net debt would also decrease from a current end of 2005 forecast of €1,016 million to €916 million," according to Ms White.
IN&M said the deal would result in a 300 per cent return on its original cash investment in iTouch.
So far, For-side has received irrevocable undertakings in favour of its offer from 53.5 per cent of the issued share capital.
Sir Anthony O'Reilly, IN&M chief executive, said it had invested in iTouch since 1997 and the €100 million purchase price represented a "remarkable and most rewarding journey". He described iTouch as a non-core asset and said the decision to sell followed the recent decision to expand into the fast-growing Indian newspaper market.
