APN News & Media and Fairfax Media are still in “early exploratory talks” considering a $200 million merger of their New Zealand businesses. Officially, both media giants are still saying nothing. And Fairfax-APN outlets are continuing to attach “it is understood” caveats to news stories they run.
It is widely expected they’ll announce a deal at the APN annual general meeting today (Wednesday).
Stuff reports that independent corporate adviser Grant Samuel is “said to be” providing advisory work on the “possible” merger of NZ Herald publisher NZME with Fairfax Media’s New Zealand assets (Stuff, the Dom Post, The Press and Waikato times.
Any deal would be subject to New Zealand’s competition regulator, the Commerce Commission.
Fairfax Media Australia said in a statement to the ASX: “Fairfax continues to explore options for all its businesses including Fairfax New Zealand, but at this time there is nothing to disclose.
“Fairfax is aware of its continuous disclosure obligations and confirms that it is in compliance with the ASX Listing Rules. Fairfax will keep the market informed as required.”
APN is preparing to announce a capital raising and demerger of its New Zealand business on Wednesday.
Stuff says it’s been told by unnamed “sources” that the demerger would free up APN so it could focus on its growth media assets of radio and outdoor, and would be supported by a capital raising of as much as A$200 million (NZ$216 million) to give the two companies the necessary balance-sheet firepower.
NZME will be listed on the local exchange and be one of the largest stand-alone media companies in the New Zealand market.
The deal is still subject to final board approval.
Grant Samuel is assisting the board with the raising and demerger, while Credit Suisse and UBS are also working with APN on both accounts.
It is understood that APN shareholders will be given shares in NZME as part of the demerger.
The spinoff of the New Zealand business has been considered for some time, with former APN chief executive Michael Miller, who is now executive chairman of News Corp Australia, flagging the idea with Fairfax Media in 2014.
APN entered a trading halt on Monday morning regarding an announcement in relation to NZME with shares at A63 cents.
“The trading halt is requested pending the release of an announcement concerning a potential material transaction by APN in relation to APN’s New Zealand business, NZME,” the company said in a statement to the Australian Securities Exchange.
“The trading halt is requested pending the release of an announcement concerning a potential material transaction by APN in relation to APN’s New Zealand business, NZME,” the company said in a statement to the Australian Securities Exchange.
“The reason for the trading halt is to prevent trading taking place in a speculative or uninformed market.”
The demerger, along with APN’s sales of its Australian regional publishing assets, will allow the media company to focus on the radio and outdoor advertising market – sectors which have an upward trend on advertising revenue.
Stuff says Rupert Murdoch’s News Corporation has been touted as one of the potential buyers for APN’s regional publishing assets.
Fairfax Australia reported a 4.2% increase in first-half profit to $A26.3 million as revenue edged up 1.6% to $A958 million. The New Zealand division, however, posted a 12% decline in first-half earnings, despite increases in its online revenue. NBR says those gains didn’t offset the continuing advertising decline in its traditional print publications. Advertising revenue fell 9.2% to $119.8 million.
The New Zealand division increased digital revenue 43%.
The Australian said that a spin-off could involve a demerger of shares to existing shareholders, an initial public offering, or a trade sale. The move could be part of efforts to have the stock market put a higher value on the company, which it believes it deserves, the News Corp newspaper reported.
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