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Transcontinental to sell 34 newspapers for regulatory approval in Sun Media deal

By: Linda Nguyen, The Canadian Press

 | May 28, 2014 - 11:31 AM |
Canada's competition regulator will approve a deal for Transcontinental Inc. to acquire 74 weekly newspapers in Quebec from Sun Media Corp. if the printing company agrees to sell 34 newspapers.

The Competition Bureau said Wednesday that the condition will help preserve advertising competition in the small Quebec communities where these publications and their websites are located.

Putting the newspapers up for sale will allow a third party to buy and operate the publications independent "to the benefit of both readers and advertisers," said the regulator.

Under the terms of the agreement, Transcontinental will try to sell the 34 newspapers for a 60-day period.

Twenty-two of the newspapers that will be for sale are Sun Media publications located in Shawinigan, Trois Rivieres, and Drummondville. The remaining 12 publications are already owned by Transcontinental, and located in Longueuil, Mont-Tremblant and Chambly.

Transcontinental said the sale process is being handled by a third-party chartered accountant firm, Mallette LLP.

"We are pleased with this decision, which allows us to close the transaction and combine the strengths of both companies," said Francois Olivier, president and chief executive officer of Transcontinental Inc. (TSX:TCL.A)

"We are enthusiastic that we will soon be able to welcome the employees of the Sun Media weekly newspapers in Quebec," Olivier said in a news release. "Despite having to put some weekly newspapers up for sale, this transaction will add about $20 million to the operating earnings before amortization of Transcontinental Inc. and further advance the local multiplatform offering for businesses and communities."

The Competition Bureau said the sale of the newspapers need to be offered at no minimum price, and requires Transcontinental to provide distribution and printing to the new owner.

Last December, Transcontinental announced that it was going to buy 74 publications and related websites from Sun Media, a subsidiary of Quebecor Inc. (TSX:QBR.B), for $75 million.

Quebecor Media still operates Quebec's largest daily newspaper Le Journal de Montreal, Le Journal de Quebec, the 24 Heures free daily and the QMI news agency.

Transcontinental is Canada's largest printer and publishes more than 30 magazines including Canadian Living and Elle Canada, as well as books and flyers. It also has a network of community newspapers in the Atlantic provinces and online portals such as AutoGo.ca and JobGo.ca, and is the owner of the Metro weekday daily in Montreal and co-owner of Metro Halifax.

Now with approval from the Competition Board, Transcontinental says both companies will be finalize the deal over the next few days.

Follow @LindaNguyenTO on Twitter.

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