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Australasian publisher John Fairfax holdings said today it planned to merge with Rural Press, an Australian publisher controlled by the Fairfax family.
Fairfax is bidding A$3.30 ($3.82) in cash plus two Fairfax shares for Rural, which is recommending the offer. The offer equates to A$13.78 to A$14.35 a share for Rural whose shares closed yesterday at A$11.85.
Fairfax said the merger would be earnings positive from fiscal 2008. It saw synergies of A$35m a year in 12 to 18 months.
The merger would create Australasia's largest integrated metropolitan, regional and rural print and digital media business, the companies said in a joint statement to the stock exchange this morning.
Fairfax publishes The Dominion Post, The Press, The Sunday Star-Times, Sunday News and a raft of provincial papers in New Zealand. In Australia, it published the Sydney Morning Herald, The Age and The Australian Financial Review.
Rural Press produces more than 160 newspapers including the Canberra Times, The Bendigo Advertiser and the Burnie Advocate and magazines across Australia. plus it operates six radio stations.
John Fairfax is the considered to be a vital piece at the centre of an expected reshuffle of media ownership in Australia following the liberalisation of ownership laws there.
Yesterday, Australian television broadcaster Seven Network took a stake in John Fairfax as the freshly cashed-up Seven readied for a shake-up of that country's A$12 billion media industry.
Shares in Fairfax rose nearly 3 per cent to a six-and-a-half year high of A$5.30 yesterday.
Seven's main owner, media mogul Kerry Stokes, yesterday confirmed a stake in Fairfax, but did not disclose the size.
Rupert Murdoch's News Corp bought 7.5 per cent of Fairfax in October. He later said he did not intend to buy all of Fairfax.
Media groups have been jostling for position before new media laws come into effect next year, allowing owners of one media platform -- newspapers, radio or television -- to own a second platform in the same market.
Seven, which also grabbed a 14.9 per cent stake in West Australian Newspapers Holdings in October, has more than A$3b to invest after last month's A$4b joint venture with private equity giant Kohlberg Kravis Roberts.
In other moves, Publishing & Broadcasting, controlled by James Packer, sold its TV, magazine and internet businesses to a new company to be jointly owned by PBL and private equity investor CVC Asia Pacific, raising A$4.5b.
Macquarie Media Group bought a 13.8 per cent stake in radio and TV station owner Southern Cross Broadcasting Ltd.
Tony O'Reilly's Irish newspaper and publishing group Independent News and Media Plc, which controls Australasian media group APN News & Media, was also said to be interested in Fairfax.
The Irish billionaire in November said he wanted to buy out the 59 per cent of APN he does not already own, but failed to reach agreement with US private equity firm Providence for the A$3.8b buyout.
APN publishes The New Zealand Herald and eight other dailies in New Zealand,
Fairfax paid $1.2b three years ago for its New Zealand publishing assets which it bought from the Murdoch controlled Independent Newspapers Ltd.
Fairfax this year paid $700m for online auction house Trade Me.
Fairfax CEO, ex All Black captain David Kirk, said the merger would create a "dynamic and diversified media powerhouse" that would extend from Western Australia to New Zealand and the US with leadership positions in metropolitan, regional, rural, business and online publishing markets.
"This is a great day for both our companies," Fairfax chairman Rob Walker.
"With a strategic value of over A$9 billion, we are poised for stronger growth and further strategic expansion of our brand in Australia and overseas in the years ahead."
Rural Press chairman John B. Fairfax said the merger is a natural progression for the continued growth of Rural Press' regional publishing business.
If the merger transpires, current Rural Press chief executive officer Brian McCarthy will become deputy ceo to Mr Kirk.
The two schemes of arrangement for the merger proposal are expected to be completed by April 2007, with scheme booklets to be circulated to Rural Press shareholders in February 2007.
- NZPA, AAP
