UPDATED: APN shareholders vote to carve out NZME as standalone business

UPDATE: The overwhelming majority of APN News & Media's shareholders have voted in favour of demerging NZME, with 99.98% saying “yes” to the move.

In a statement, APN News & Media chairman Peter Cosgrove said the resulting creation of two independent media companies “will enhance shareholder value by enabling them to better pursue their own strategic priorities and growth initiatives.”

For APN that means being able to “focus and capitalise on our high growth media assets across the Australian radio and outdoor markets.”

Although the deal is still subject to Overseas Investment Office approval, NZME chief executive Michael Boggs says it’s hoped that approval will be received in the next two weeks, “which would allow us to be listing on the NZX on June 27.”

EARLIER: APN News & Media's [ASX: APN] 6933 shareholders will today vote on whether to carve out NZME as a standalone business, leaving stock in separate media companies on either side of the Tasman.

The company is holding a special meeting in its Sydney base today, asking investors to vote on a split of the New Zealand publisher and radio operator. The transaction would see a one-for-seven share consolidation in the Australian company, then a distribution of NZME shares to those investors on a one-for-one basis. The deal then frees up APN to focus on Australian radio and outside advertising business, while NZME can pursue its merger with rival Fairfax New Zealand.

Chairman Peter Cosgrove said the board also considered keeping the status quo, selling NZME or floating the New Zealand business before deciding the demerger would create the most value for shareholders.

"The demerger gives both APN and NZME flexibility to pay dividends within the next 12 months," Mr Cosgrove said in speech notes published on the NZX ahead of the meeting.

APN intends to pay dividends at a ratio of 40-60% of underlying net profit, while NZME's ratio is expected to be 60-80%.

"It is proposed that NZME's first dividend will be considered for the six month period to June 30, 2016," he said.

NZME and Fairfax Media's New Zealand unit have filed an application with the Commerce Commission to merge their businesses, which they claim is needed to fend off global digital advertising giants such as Google and Facebook. The regulator has since said it will look at whether there are separate print and digital markets for both readers and advertisers and if other online offerings are real competitors to New Zealand's stuff.co.nz and nzherald.co.nz websites.

APN chief executive Ciaran Davis said NZME has exceeded earnings before interest, tax, depreciation and amortisation targets, which was $67.5 million in 2015 on revenue of $433 million.

The demerger gives the group flexibility to invest in the entities separately, "allowing them to succeed in their individual markets," Mr Davis said.

APN shares were unchanged at 68c on the NZX and last traded at 64Ac on the ASX.

The meeting was scheduled to start at 11am New Zealand time.

(BusinessDesk)