MENU

Why the Fairfax Media Limited board is going ahead with its Nine Entertainment Co Ltd merger

Fairfax Media Limited’s (ASX: FXJ) proposed merger with Nine Entertainment Co Ltd (ASX: NEC) is set to be approved by shareholders at an EGM or Scheme Meeting being held by the Fairfax board for shareholders today.

This is despite news reports in the Fairfax Media itself that its former CEO of domain.com.au, Anthony Catalano, is seeking to block the deal by writing a letter late on Sunday night to the Fairfax board that outlines an alternate plan to the board.

According to the news reports Catalano is proposing to buy 19.9% of Fairfax’s shares himself and then extract more value out of the group via improved performance at domain.com.au among other proposals.

However, it appears Fairfax’s board has dismissed the letter as not credible and today emphasised the benefits of bringing together some of Nine and Fairfax’s star assets.

“The combined group will be focused on enhancing the growth prospects for Domain and Stan and providing an improved proposition for advertisers to grow revenue,” Fairfax’s chairman told the scheme meeting this morning.

The problem for shareholders of both parties is that since the scrip merger deal was announced on July 27 2018 the value of groups has tumbled on the back of a weak full year report and October 12 trading update from Fairfax.

Unfortunately for all groups it’s been domain.com.au trading under Domain Holdings Australia Ltd (ASX: DHG) that has underperformed the market’s expectations in posting only flat revenue growth for the start of FY 2019.

Domain shares hit a record low of $2.29 last week on the back of the weak performance, but have climbed 4.7% to $2.46 this morning on the back of news that the merger is set to go ahead.

For investors it seems clear that the TV and print media space is facing structural problems with the Ten Network no longer listed and Seven West Media Limited (ASX: SWM) shares losing more than half their value over the last five years.

For the new Nine Group then much will depend on the performance of Stan and domain.com.au.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Atlassian.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Yulia Mosaleva has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!