The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price has edged higher today as its Macquarie Media Ltd (ASX: MRN) acquisition looks set to go ahead.
What was announced this morning?
According to an article in the Australian Financial Review (AFR), Wilson Asset Management chairman Geoff Wilson accepted Nine’s $1.46 per share deal for his stake.
This comes after Nine secured more than 90% of the shares in Macquarie Media, which allowed it to pursue a compulsory acquisition.
Mr. Wilson had been seeking a higher price for his 4.7% Macquarie Media stake but ultimately decided against any legal action.
Back in August, Nine put forward a $113.9 million bid for 45.5% of the Aussie media group not under its control.
Mr. Wilson believes that the $1.46 per share offer price undervalues Macquarie shares and lamented the offer that “greatly undervalues the company”.
What does this mean for Nine?
Nine can now move forward to acquiring the last remaining shares of Macquarie Media.
The Nine share price has climbed 37% higher in 2019 in a rather consistent share price performance from the Aussie media group.
This is particularly impressive in the context of the broader media industry, which is seeing print media decline and lower margins.
Indeed, Nine’s own $4 billion merger with Fairfax Media showed an industry requiring consolidation and restructuring.
However, that move appears to be paying dividends for shareholders so far in 2019 while also yielding 5.41% per annum.
Should you invest in Nine shares?
Despite the strong share price performance, I remain reasonably bearish on Nine for 2020 and beyond.
There’s not much to complain about, with share price growth above the ASX 200 and a 5% dividend yield. However, I worry that the structural headwinds of the media sector will be too much for Nine – even with its Macquarie Media acquisition.
Instead, I’d suggest looking at BHP Group Ltd (ASX: BHP) for its 5.36% dividend yield and possible undervaluation at the moment.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nine Entertainment Co. Holdings Limited. 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.