Skip to main content
Open this photo in gallery:

A person enters the Toronto Star office at the foot of Yonge Street on May 27, 2020.Fred Lum/the Globe and Mail

Two Toronto investors are proposing to offer about $58-million for the company that publishes the Toronto Star newspaper in a competing bid that would up the ante on a friendly deal by about 14 per cent, according to sources familiar with the situation.

Matthew Proud, chief executive officer of Dye & Durham Corp., and his brother Tyler Proud, CEO of technology company Avesdo Inc., have approached the board of Torstar Corp. through a holding company they control with a proposal to pay 72 cents a share, the sources said. They added that the pair hope to beat an agreed offer of 63 cents from Jordan Bitove’s and Paul Rivett’s NordStar Capital. It is believed Tyler Proud is leading the effort to buy Torstar, as his brother is in the middle of a road show to take Dye & Durham public.

It is not yet a formal bid, the sources said, and it is now less than two weeks before shareholders are due to vote on the NordStar offer. The Globe has agreed not to name the sources because they are not authorized to speak publicly.

A source close to the situation said the Proud brothers presented the proposal in late June through their shell company, Canadian Modern Media Holdings Inc. Another source said Neil Selfe, founder of merchant and investment bank Infor Financial Group Inc., is involved in the effort.

The upstart suitors are believed to be attracted partly by the company’s balance sheet, which includes about $70-million in cash, some non-core assets believed to be worth more than that, with no bank debt, the sources said. However, Torstar’s media operations have lost money for years amid a steep, industry-wide drop in advertising revenue, and the company has struggled to make a profitable shift to a digital business model.

But the rivals believe the deal struck with NordStar undervalues Torstar, leaving them room to make a profitable return while turning Torstar around by bringing their experience with digital transformations to bear.

With Matthew Proud as its head, Dye & Durham is in the midst of an initial public offering in which it is seeking to raise $100-million. Infor Financial is one of the investment banks involved in the IPO. Tyler Proud was Dye & Durham’s chairman until 2017. He moved Avesdo to an online platform since joining the company that year. It provides deal- and revenue-management software for real estate developers and home builders.

Mr. Selfe, Infor’s CEO, is a veteran dealmaker who co-led global technology, media and telecommunications investment banking for Royal Bank of Canada from 1995 to 2004.

Sources said Matthew Proud holds Torstar shares, although it is not known how many. He declined to comment when contacted by The Globe. A Torstar spokesman did not respond to requests to comment.

In late May, NordStar struck a deal to buy Torstar, which has spent years selling assets, closing newspapers and cutting staff. Business conditions worsened when the pandemic forced mass restrictions on movement. Mr. Bitove and Mr. Rivett had begun their negotiations in February.

Canso Investment Counsel Ltd., also a lender to competing newspaper chain Postmedia Network Canada Corp., is providing financing.

Mr. Bitove is an entrepreneur whose family is best known for establishing the NBA’s Raptors in Toronto. Mr. Rivett recently retired as president of Fairfax Financial Holdings Ltd., Torstar’s largest shareholder.

After they announced their deal to take Torstar private, the NordStar executives said they plan to accelerate the push to make the company a digital news and information provider, which they say would be best accomplished outside public markets. They also committed to maintain the Star’s progressive editorial principles, seen as key to the five families that have long held a controlling stake.

A spokesman for NordStar declined to comment on the competing proposal, calling it rumour and speculation, and ruled out the possibility of having to sweeten the friendly offer.

“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,” the spokesman said in a statement.

Shareholders are slated to vote on the deal on July 21. It has the blessing of Torstar’s board and a majority of the class-A voting shares, which are held in a trust for the families. They comprise the Honderich, Hindmarsh, Campbell and Thall families, as well as the family of long-time publisher Joseph Atkinson, who died in 1948.

It also has the backing of Fairfax, which has 40 per cent of the class-B shares.

The company, which publishes other newspapers including The Hamilton Spectator, the Waterloo Region Record and the St. Catharines Standard, has struggled through five years of financial losses. It has made some costly strategic missteps, such as an attempt to create a tablet-based newspaper and a national expansion of the Star brand in print, from which it has since retreated.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe