The listed companies announced that an initial agreement has been reached that will see Nine Entertainment acquire all Fairfax shares, to create one of Australia’s largest media businesses.
Under the proposal, Nine shareholders will own 51.1 per cent of the new media giant, with Fairfax shareholders owning the remaining 48.9 per cent.
Nine’s current CEO, Hugh Marks, will head the new business, with three of Fairfax’s current directors joining the board.
The deal will include Fairfax’s property arm Domain, which the company had previously said would spun out into a separate, listed business.
“Both Nine and Fairfax have played an important role in shaping the Australian media landscape over many years. The combination of our businesses and our people best positions us to deliver new opportunities and innovations for our shareholders, staff and all Australians in the years ahead,” said Nine chair Peter Costello.
He added the merger is expected to realise annual cost savings of at least $50 million across the two operations.
Speculation is already rife that these costs will come, at least in part, from massive job losses as the newsrooms of each business are consolidated.
Yet, Fairfax CEO Greg Hywood suggested the move will safeguard journalism while continuing to drive growth in its content offering.
“The proposed transaction for Fairfax reflects the success of Fairfax’s transformation strategy, which has created value for shareholders through targeted investment in high-growth businesses, such as Domain and Stan, and prudent management of our media assets. The combination with Nine provides an exciting opportunity to continue to drive incremental value well into the future,” he said.
“We are confident that the strength of the combined management team and staff will ensure the continuation of our quality journalism.”
The merger is subject to a variety of steps, and is likely to attract intensive scrutiny from the Australian Competition and Consumer Commission.
**Update: 11:20am Thursday, 26 July 2018**
An internal email sent to Fairfax staff was leaked almost immediately to social media, with Fairfax journalists claiming the board was selling out its 150-year history in just six, short paragraphs.
The full statement issued to Fairfax staff is below:
This morning we announced that Nine and Fairfax Media would merge, resulting in one of Australia's leading independent media companies. The merged company will be called Nine. The ASX statement is attached.
The combined business will include Nine's free-to-air television network, Fairfax's mastheads, a portfolio of high growth digital businesses, including Domain, Stan and 9Now, and radio interests through Macquarie Media.
Over the last eight years Fairfax Media has gone from being at the mercy of the non-stop global media revolution to being best of its breed. And that is why Nine wants to merge their business with ours.
Working through the detail will take a number of months but you can be assured that there will be plenty of Fairfax Media DNA in the merged company and the Board.
It is business as usual as we move through the necessary details, planning and shareholder approvals.
I would like to thank everyone for their contribution to Fairfax. At the end of this process the business will be a media company of scale, depth of offering and digital capacity and opportunities like no other in our region.