The company that publishes the Toronto Star has agreed to be sold to a company run by entrepreneurs Jordan Bitove and Paul Rivett in a deal worth roughly $ 52 million.
Torstar, a print and digital publishing company that runs newspapers and websites across the country, including the Toronto Star and thestar.com, announced the deal with NordStar Capital Tuesday evening.
Tuesday, Torstar’s B shares fell 16 per cent, closing at 40 cents per share, giving up some of their gains from the day before, when they rose from as low as 33 cents to 48 cents per share, with most of the gains coming in the last hour of trading on the TSX. NordStar’s offer is worth 63 cents per share, for all Class A voting shares and Class B non-voting shares.
“We believe in news. With this transaction we can ensure a future for world-class journalists and world-class journalism befitting the paper’s storied history,” said Bitove. “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.”
“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,” said Rivett, who stepped down recently as president of Fairfax Financial Holdings. Fairfax, controlled by insurance magnate Prem Watsa, had held 40 per cent of Torstar’s non-voting shares at the time of the deal.
Bitove and Rivett said former Ontario premier David Peterson will be vice chair of the company, which they intend to take private. Current Torstar CEO John Boynton will remain in his role. The deal was approved by Torstar’s board of directors, a “significant majority” of Class A voting shareholders, as well as Fairfax.
NordStar, controlled by Bitove and Rivett, and owned by their families, said just over 60 per cent of shareholders had already agreed to the transaction. A special shareholders’ meeting will be held in mid-July to formally vote on the deal.
In a joint statement, Bitove and Rivett said taking the company private will allow it to focus on long-term goals, rather than quarterly results.
“The harsh realities of the news media business are ill-suited to the quarter-bound short-term focus of shareholders. A private structure is needed and we have the patience and willingness to invest in Torstar’s long-term transformation,” Rivett and Bitove said.
The statement added that Bitove and Rivett will maintain the Star’s editorial process and commitment to the “Atkinson principles,” which have driven the paper’s progressive journalism throughout its 128-year history.
“While we have loved the company and are immensely proud of it, the time has come to pass the torch,” John Honderich, chair of Torstar’s board of directors, said in a press release announcing the transaction.
“We hope the sale will benefit Torstar in the years ahead and believe that this is the beginning of an exciting new chapter for the company. We are delighted to know that the new owners have pledged to build on Torstar’s legacy of quality journalism and to promote the Atkinson Principles at the Toronto Star.”
NordStar said it was “assisted” on the deal by PointNorth Capital, formerly known as Oxford Capital. In a 2016 press release announcing the name change, PointNorth said it had received financing from the Ontario Municipal Employees Retirement System.
Torstar’s A class voting shares had been controlled since 1957 by a group of 5 families, including the Honderich family, the family of longtime publisher Joseph Atkinson, as well as the Hindmarsh, Campbell and Thall families.
The families created the voting trust after the then-provincial government blocked a provision in Atkinson’s will that would have turned the paper over to a charitable trust. Atkinson died in 1948.
In October 2019, Torstar eliminated dividend payments, saying they wouldn’t be returned until late 2020. If there were no dividends for eight straight quarters, that would have given B shares voting rights.
In 2017, Fairfax boosted its stake in Torstar’s B shares to 40 per cent, up from the 27 per cent it had already held.
Torstar, which publishes a portfolio of newspapers and websites, including the Toronto Star and thestar.com, had a net loss of $ 23.5 million (29 cents per share) in the first quarter, up from a net loss of $ 7.4 million (9 cents per share) in the same period last year. At the end of the first quarter, Torstar had $ 69.4 million in cash and cash equivalents, and no debt.
the Toronto Star — first known as the Evening Star — was founded by printing press workers in 1892. The workers had been locked out during a labour dispute with another paper. Atkinson purchased the Star two years later then ran it until his death in 1948.
Besides the Toronto Star, Torstar owns six other daily newspaper in Ontario including The Hamilton Spectator and Waterloo Region Record, some 70 community newspapers and numerous news sites and digital properties.