Astral could be sold piecemeal after BCE deal blocked
By Euan Rocha
TORONTO (Reuters) - Canada's Astral Media, owner of television, radio and outdoor-advertising assets, could be broken up and sold to several buyers, analysts said on Friday, after the country's broadcast regulator unexpectedly vetoed a takeover by BCE Inc.
Astral stock fell more than 15 percent in active afternoon trade of more than 4.5 million shares after the Canadian Radio-Television and Telecommunications Commission (CRTC) said on Thursday that the C$3 billion ($3 billion) deal would give too much market power to BCE, already Canada's biggest telecoms company and owner of numerous TV and radio assets.
The proposal, which faced fierce opposition from BCE competitors including Quebecor Inc and Rogers Communications, was not in the best interest of Canadians, the CRTC said.
"Our expectation is that Astral will undertake a strategic review given this decision and the desire of the controlling shareholders to sell the business," Scotiabank analyst Paul Steep said in a note to clients.
But the level of concentration that already exists within the Canadian cable and broadcasting arena, plus balance sheet concerns for some in the sector, have left most analysts doubting that a single buyer will emerge.
Steep, who cut his target price on shares of Astral to C$44 from C$50, pegs the media company's break-up value at about C$46 a share.
"We believe breaking up Astral and selling the pieces is a viable option for the company," RBC analyst Drew McReynolds said in a note. "Astral has one of the best asset mixes of any Canadian media company, and we see significant buying interest from both strategic and financial players for television, radio and outdoor assets."
Shares in Astral Media fell almost 20 percent at the market open on Friday and closed about 16 percent lower at C$39.51 on the Toronto Stock Exchange. Continued...