Fairfax shareholders vote for Nine merger
Fairfax Media shareholders have overwhelmingly voted in favour of a takeover from Nine Entertainment Co, with 81.49 per cent of shareholders approving plans for the two companies to merge by the end of the year in an historic deal.
Former Domain chief executive Antony Catalano has indicated he will look to block the deal in court, having asked Fairfax to delay the shareholder vote on Sunday evening after a dramatic eleventh-hour offer to buy up to 19.9 per cent of the newspaper publisher's shares and sell off non-core assets.
“Looks like I’ll be asking the court to reject the scheme because shareholders were not given an opportunity to have a fully informed view of my alternate proposal," Mr Catalano wrote in a short statement to Fairfax after the vote on Monday.
Proxies voted 94.2 per cent for the scheme arrangement, representing 66 per cent of shareholders.
Fairfax shareholders are able to attend court on November 27 to oppose the approval of the scheme. Mr Catalano holds about 1 per cent of Fairfax and Domain shares.
Fairfax decided to go ahead with the vote, despite Mr Catalano’s request for a delay. Fairfax chairman Nick Falloon told investors his offer did “not constitute a superior proposal” and "therefore the Fairfax board is unable to consider it in any event".
"Fairfax shareholders will have the opportunity to participate in the benefits expected to be unlocked from the combined group's combination of assets and strategic opportunities," Mr Falloon said.
If the Nine takeover is given court approval, the 177-year-old Fairfax name will disappear from corporate Australia. Fairfax is the publisher of this website. Shareholders will receive 0.3627 Nine shares and 2.5¢ in cash for each Fairfax share they hold under the terms of the deal.
Shareholders posted questions about Nine's experience with running newspapers and radio, the editorial independence and dedication to print, redundancies across the businesses and the impact of a recent fall in Fairfax's share price.
When the Nine-Fairfax deal was announced, the arrangement implied a 22 per cent premium to Fairfax's share price (a takeover price of 84¢ with a combined value of both companies at $4.2 billion), however, Fairfax shares finished at 62¢ on Friday.
"We’re in a market that has changed since we announced this agreement," Mr Falloon said, before describing the deal as "compelling" for shareholders regardless of the share price change.
Mr Catalano says this change has made the deal "terrible" for Fairfax shareholders, despite voicing his support for the tie-up in August.
The fall in the share price has been attributed by some analysts and industry members to a weak trading update from Domain for the first 15 weeks for the year (Fairfax is the majority shareholder) on the back of softening property markets in major capitals Sydney and Melbourne.
The arrangement will give Nine control of Fairfax's mastheads, including The Sydney Morning Herald and The Age, a 59 per cent stake in real estate listings website Domain, radio interests in Macquarie Media (owner of talk stations 2GB and 3AW) and an additional 50 per cent of subscription video streaming platform Stan. About $50 million of annualised cost savings are expected in the next two years.
The deal required 75 per cent of shares voted, and 50 per cent of shareholders, to achieve approval with proxies ahead of the meeting overwhelmingly in favour of the merger.
The merger faced early opposition by members of the journalists' union and former prime minister Paul Keating, on the grounds it could threaten editorial integrity and diversity. The competition regulator chose not to block the deal earlier this month.
The Fairfax-Nine tie-up marks the first act of media consolidation after the Turnbull government changed cross-media ownership rules last year.
More to come
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