Fairfax and NZME merger proposal confirmed

See also: Competition concerns may not stop media merger approval, lawyer says

APN News & Media has today confirmed plans to demerge NZME and revealed it is in discussions with Fairfax Media about a potential merger of their New Zealand businesses.

“If completed, the combined company will be a leading New Zealand media business, offering depth of news, sport and entertainment coverage across a diverse mix of channels including print, digital and radio," an ASX announcement says.

The two entities have been in preliminary discussions about a potential merger, which will be subject to approval by both companies’ boards, shareholders and the Commerce Commission. The merger is expected to be completed by the end of 2016, subject to all necessary approvals.

“The New Zealand businesses of NZME and Fairfax are, to a large extent, complementary. The expanded network of brands and channels would create an opportunity to deliver improved, innovative offerings to advertisers and audiences,” the joint announcement says.

APN announced its proposal to demerge NZME but Fairfax has not announced a similar initiative, leaving it open to a variety of different ways of structuring ownership of a merged entity.

An NZME demerger will be completed by an in-specie distribution to APN shareholders, giving them one new share for the New Zealand business for each APN share they hold. APN and NZME will be separately listed on the ASX and NZME will be listed on the NZX. The demerger will cost $A8.3 million, APN chief executive Ciaran Davis says.

The company says it considered a number of potential alternatives for NZME, including retaining the status quo, a divestment, demerger or an initial public offering.

APN News & Media also announced an $A180 million capital raise through an accelerated renounceable entitlement offer.

APN’s shares have been in a trading halt since Monday and the nature of its announcement was widely speculated about in New Zealand and Australian media.

Fairfax’s shares have not been in a trading halt and it made an announcement earlier this week that it had nothing to disclose to the market.

The two businesses own the majority of media assets in New Zealand including the stuff.co.nz and nzherald.co.nz websites, the NZ Herald, Sunday Star Times, Dominion Post, The Press, as well as numerous other regional and community newspapers. NZME operates a number of radio stations after it merged with the formerly named Radio Network. 

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