Fairfax Media Merger with Nine after Six Months of Climbing Share Price

Shares of Fairfax media [ASX:FXJ] have been steadily increasing over the last six months, trading at $0.72 back in 2 February and peaking at $0.80 in 20 July this year — a 13.38% increase.

And earlier this morning, it was announced on the ASX that Fairfax are merging with media giant Nine Entertainment Co. Holdings Limited [ASX:NEC].

The Proposed Transaction will mean that Nine will acquire all Fairfax shares under a Scheme of Arrangement. Nine will effectively be the dominant partner with current shareholders holding 51.1% of the Fairfax shares.

What will this Fairfax–Nine merger deliver?

The merger will unlock great potential for significant growth by combining the content, brands, audience reach and data across respective businesses, including majority owned group companies such as Domain and Macquarie media.

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To Fairfax, the strength of the combined management team and staff will ensure the continuation of quality journalism.

What does this mean for Fairfax shareholders?

Fairfax’s chairman Nick Falloon commented:

The Fairfax Board has carefully considered the Proposed Transaction and believes it represents compelling value for Fairfax shareholders.

The structure of the Proposed Transaction provides an exciting opportunity for our shareholders to maintain their exposure to Fairfax’s growing business whilst also participating in the combination benefits with Nine.

Investors shouldn’t be too worried, as anyone holding a Fairfax share will receive consideration compromising:

  • Script consideration, where each Fairfax share held equates to 0.3627 Nine shares.
  • Cash consideration, with $0.025 cash consideration per Fairfax share, and…
  • Together, aggregate consideration, which means shareholders can receive a 21.9% premium to Fairfax’s closing price on 25 July 2018 of 0.77, or 22.6% premium to Fairfax’s one-month volume weighted average price (VWAP) to 25 July 2018 of $0.766.

The directors of Fairfax recommend that shareholders vote in favour of the scheme, as they state it in the best interest of Fairfax shareholders.


Ryan Clarkson-Ledward,
For Money Morning


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Ryan Clarkson-Ledward is an Editor at Money Morning.

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