Second bidder proposes $58M buyout of Torstar, sources say

And then there were two.

A second bidder for the publisher of the Toronto Star has emerged, just weeks ahead of a shareholders meeting where the first bid — by Toronto entrepreneurs Jordan Bitove and Paul Rivett — was to be voted on.

The new proposal to acquire Torstar is worth $58 million, according to a report in the Globe and Mail and confirmed by industry sources to the Star, up from the $52 million offered by Bitove and Rivett.

The proposal is being led by Matthew Proud, CEO of legal software firm Dye & Durham Corp., and his brother Tyler Proud, CEO of technology company Avesdo Inc. Sources said Neil Selfe, financial industry veteran and founder of Infor Financial Group, is also involved.

Selfe’s firm, Infor, is one of the underwriters for the pending IPO of Dye & Durham.

At this point the offer is a proposal, and not yet a formal bid.

Neither of the Prouds nor Selfe responded to emails from the Star seeking comment.

Torstar chair John Honderich also declined to comment, citing confidentiality.

A spokesperson for Bitove and Rivett said the pair would not be commenting on the competing bid. “We won’t comment on rumour or speculation,” the spokesperson said. “Our bid for Torstar fully values the company given the significant expenses that will need to be incurred to ensure the growth and prosperity of the flagship Toronto Star and community newspapers. We informed the company early on that we have no plans to increase our bid.”

Torstar is a newspaper and digital publisher that runs several daily newspapers and websites including the Toronto Star and thestar.com.

It wasn’t immediately clear what the new bid means for the July 21 meeting, where shareholders had been scheduled to vote on Bitove and Rivett’s offer, but sources said the meeting was still scheduled to go ahead as planned as of Wednesday.

Bitove and Rivett’s bid, through their purpose-created company NordStar, had already been raised once before. Their first bid was for 56.6 cents per share. In June, they raised it to 63 cents per share. The Proud brothers’ bid values Torstar at 72 cents per share.

The Proud bid was initially made in late June, shortly after details of Bitove and Rivett’s bid — and agreements with various shareholders — were made public as part of regulatory filings.

Both bids are for less than the $69 million in cash Torstar had in the bank at the end of the first quarter, and the company had no bank debt. NordStar’s plan included taking Torstar private.

The NordStar bid, which is being financed by a five-year, $55million loan from Canso Investment Counsel, was given the seal of approval by Torstar’s board in late May. It had thus far gained the support of 84 per cent of Class A shareholders and 57 per cent of Class B shareholders. (A majority of both groups, and 66 per cent of the groups added together, were necessary to approve the deal.)

If either side walks away from the NordStar deal, the side that walks would owe the other a $3.5-million break fee.

Torstar’s A class voting shares have been controlled since 1957 by a group of five families, including the Honderich family, the family of longtime publisher Joseph Atkinson, as well as the Hindmarsh, Campbell and Thall families. The Thall family wasn’t in favour of the deal with NordStar, according to regulatory filings.