Fairfax shareholders vote for Nine takeover deal
- 19 November, 2018 11:05
Fairfax Media has played down reports former Domain Group CEO, Anthony Catalano, has made an alternative offer for the business as shareholders throw their support behind the proposed historic merger with Nine Entertainment Company.
In a statement posted to the ASX today, the company confirmed it had received a letter from Catalano on 18 November, also circulated to media, which looked to threaten the controversial Fairfax-Nine merger at the eleventh hour. In the letter, Catalano said the merger was a poor deal, and did not realise the value of assets such as Domain.
According to media reports, Catalano offered to acquire up to 19.9 per cent of Fairfax at above market prices, saying he’d pursue a ‘multi-pronged strategy’ to generate more value for the publisher's shareholders by selling non-core assets, building the Domain franchises and pursuing other asset sales. Catalano abruptly left his post at Domain earlier this year, just two months after Domain listed on the ASX.
However, Fairfax this morning stated the letter contained no actual proposal that could be considered by shareholders as an alternative to the proposed scheme of arrangement put forward today for vote.
As of this morning, 81.49 per cent of shareholders approved the $4.2 billion takeover of Fairfax by Nine in one of Australia’s most historic media deals. The vote came a week after the Australian Competition and Consumer Commission (ACCC) gave the green light, even as the industry watchdog admitted the Fairfax-Nine deal is likely to reduce media competition.
In his presentation, Fairfax chairman, Nick Falloon, said the merger with Nine received overwhelming shareholder support and was now expected to be implemented on 7 December. The merger became a reality following Australia’s media ownership deregulation last year. Its final hurdle is securing Federal Court approval on 27 November.
Fairfax CEO, Greg Hywood, said it was a momentum day for Fairfax reflecting the next phase in its development.
“The support of shareholders recognises the great opportunity ahead and the work of everyone at Fairfax to put our company in this strong position,” he said. “The merger creates a powerful growth engine.
“The combine group’s increased scale of audiences and marketing platforms will drive value creation and delivers long-term benefits to shareholders. Our journalism is now on an even stronger and sustainable footing for the future.”
Hywood also emphasised Fairfax’s “proud history of independent journalism” and the group’s track record in terms of industry awards.
“While it is the end of an era for the Fairfax corporate identity, independence is indelibly at the heart of our newsrooms and carries on into the future through our journalists. Our mastheads live and breathe the spirit of ‘Independent. Always’,” he said.
Despite Fairfax’s ongoing corporate and business challenges in the transformed media environment, Hywood said Fairfax’s business transformation strategy over the past seven years has created a stronger, digitally led business. He noted digital and non-print revenue now accounts for 40 per cent of total revenue. Domain has become a $1.4 million company, while Stan has built a subscriber base of 1.2 million consumers since launching four years ago, and $1 billion of net debt has been cleared.
“All this has put Fairfax shareholders in a position to benefit from the upside potential of owning close to half of the merged Fairfax and Nine businesses,” Hywood continued. “Our three publishing businesses are emerging from a period of great change. Each is profitable, generating valuable cash flows and positioned with distinct markets, products and strategy to leverage growth.”
“We are adamant believers in this merger, which we believe is the best opportunity for our journalists, and business and our shareholders,” Hywood added. “We identified this opportunity some time ago, which is why we lobbied so hard for the changes to the media ownership laws so that we could be standing here today.”
Nine CEO, Hugh Marks, welcomed the shareholder vote and cited it as the latest endorsement of the opportunities the merger presents.
"We are now working very hard to realise the cost synergies and explore revenue opportunities that will enable us to continue to invest in great Australian content and journalism," he said via a statement.