Media company Torstar to go private after sale to NordStar Capital in $52M deal

NordStar Capital LP, a private firm owned by businessmen Paul Rivett and Jordan Bitove, plans to take Torstar private

Torstar Corp., the parent company of the Toronto Star and a host of other media properties across Canada, is being sold to NordStar Capital LP, a private firm owned by businessmen Paul Rivett and Jordan Bitove, in a $52 million deal, Torstar announced Tuesday evening.

Upon completion of the transaction, the company is expected be taken private.

“Since its inception as the Evening Star, the Star has been the voice of this city. As Canada’s largest daily newspaper, it has fulfilled a vital civic role as an outlet for expert opinion and what’s trusted as true,” Rivett said in a statement.

According to the statement, NordStar has indicated that former Ontario premier David Peterson will be appointed as vice chair of the Toronto Star once the deal closes.

Under terms of the deal, Bitove and Rivett will acquire all Class A shares and Class B non-voting shares of Torstar for 63 cents per share — a 67 per cent premium to the 20-day volume-weighted average trading price of the Class B shares as of May 25.

Torstar stock fell 17 per cent Tuesday, to close at 40 cents, roughly the same price at which it traded when the COVID-19-induced economic shutdown began two-and-a-half months ago.

“We believe in news. With this transaction we can ensure a future for world-class journalists and world-class journalism befitting the Star’s storied history,” Bitove said in Tuesday’s press release. “We are committed to investing in the news business, along with preserving the Atkinson Principles, as fairness and accuracy will continue to guide the papers’ prevailing value system.”

The transaction was supported by the media company’s largest independent shareholder, Fairfax Financial, which owns roughly 40 per cent of Torstar’s non-voting Class B shares.

Rivett was at Fairfax Financial for 17 years, seven as president, before retiring in February, although he has remained chairman of several Fairfax investees, including Recipe Unlimited and Fairfax Africa.

A meeting of all Class A and Class B shareholders will be called in mid-July to approve the transaction, and the deal is expected to close by the fall of 2020.

“We salute, without hesitation, the huge contribution of thousands of employees who have worked over the years to make Torstar so great. However, we have also come to realize that for Torstar to succeed now, it requires new ownership with both resources and determination,” wrote John Honderich, chairman of the company and a member of one of the five founding families of the newspaper chain, in a Toronto Star op-ed.

“We have tried to innovate and adopt new strategies to succeed in this new world … but quite frankly, it has been an uphill struggle.”

Torstar, like many other newspaper chains across North America, has seen its revenue dramatically erode over the past decade or so because of the decline in popularity of print newspapers and the emergence of tech giants Facebook and Google, which have scooped up the majority of digital advertising revenue.

The company’s losses widened in the first three months of 2020, due in part to the impact of the coronavirus on ad revenue, which dropped 20 per cent from the same time last year.

Torstar shares have been in steady decline since they peaked above $30 in 2004.

The media company, which owns six other daily newspapers in Ontario including the Hamilton Spectator and roughly 70 community newspapers and news sites has attempted, on numerous occasions, to reverse its fortunes.

In 2015, the company paid $200 million for a 56 per cent stake in VerticalScope Holdings Inc., a digital media company with 600 consumer enthusiast forums and content sites.

Torstar also invested tens of millions of dollars in Star Touch, a tablet-only app that was launched in 2015 and scrapped in 2017.

This past December, the company stopped many of their Star Metro print editions and announced a wave of layoffs and voluntary buyouts for editorial employees.

— With files from Financial Post staff