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).
