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LABATT GETS NASTY: RESTRUCTURES TSN FOR BITTER TAX PILL
Published May 31, 1995
Onex Corp. said yesterday they may be forced to lower their C$24 a share offer for John Labatt Ltd. should the brewer proceed with a "reorganization" of The Sports Network that would burden any purchaser not approved by Labatt officials with a C$150M tax liability. Under the reorganization, TSN would be broken out into a separate ownership structure. Onex claims Labatt created the scenario after rumors of a takeover bid. Onex CEO Gerry Schwartz: "Labatt management has adopted a 'scorched earth approach. Instead of showing us information that might let us raise our price, they have created a reason for us to reduce our price." One source close to Labatt told the FINANCIAL POST that "the company could move the broadcast assets into their formal ownership structure at its discretion." The source: "It's a C$150-million tax liability the black knight would get tagged with that a white knight wouldn't." Meanwhile, Labatt's Board released a circular yesterday giving 11 reasons shareholders should not "tender to Onex's play for the company" (Paul Brent, FINANCIAL POST, 5/31). Onex may have to lower their bid by up to C$1.60 a share (Marina Strauss, Toronto GLOBE & MAIL, 5/31). In Toronto, Labatt's possible breakup has columnist Bob Elliott wondering to whom the Jays may be sold. Elliott suggests that a candidate step up and buy the ballclub from Labatt before the brewer is sold (TORONTO SUN, 5/31).