Fairfax Media will take a 41 per cent stake in its merger with NZME, plus NZ$55 million in cash, in a deal that will create New Zealand’s largest media company with an audience of 3.7 million.
Sydney-based Fairfax will have two directors to the NZME Board under a merger implementation agreement released to the stock exchanges of Australian and New Zealand yesterday.
A number of “broadly standard reciprocal warranties” exist and if breached may provide either party with the right to cancel the deal.
Operation duplication and subsequent cost-efficiency decisions are likely to involve a one-off cost to the combined business.
The merger must be approved by the local Commerce Commission, which has promised guidance next month and a final decision on or before March 15.
Consent is also required from the New Zealand Overseas Investment Office and a shareholder vote – seen as a formality – will be held in November at the latest.
NZME plans to use a syndicated bank facility to fund its obligations under the merger agreement. Its chief executive, Michael Boggs, said the company was delighted with the progress of the negotiations.
“The merger will present opportunities for NZME to significantly enhance our integrated offerings to both our audience and our advertising clients,” he said.
Fairfax NZ managing director Simon Tong said the merger would combine leading and complementary brands in news, sport and entertainment across multiple channels.
“Both businesses have a tradition of innovation and a combined business allows us to continue to invest in quality New Zealand journalism – ensuring a strong future for storytelling by Kiwis, about us, and for us,” he said.
Until all conditions of the merger are satisfied, NZME and Fairfax NZ will continue to operate as independent businesses.
Information relating to the merger is expected to be provided to shareholders in October.
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