New Zealand's two biggest media companies have signed a merger deal.
Photo: SCREENSHOTS, RNZ
Under the terms announced today, NZME would buy 100 percent of Fairfax New Zealand, in return for 41 percent of the enlarged company's shares. Fairfax NZ's Australian owners would also receive $55 million in cash.
A merger implementation agreement has been signed by both companies.
The two companies had a combined revenue of $766.2 million, with an operating profit of $135.2 million, in the year ended June.
NZME, which was carved out of Australia's APN News and Media group and listed on the local stock exchange earlier this year, would also increase its debt levels by $90 million to $250 million through a syndicated bank facility.
The companies expected the merged business to increase value for NZME shareholders with a combined audience size of about 3.7 million people, across print, digital and radio platforms.
"The merger will present opportunities for NZME to significantly enhance our integrated offerings to both our audience and our advertising clients," said NZME chief executive Michael Boggs.
The merger is still subject to various approvals, with a decision from the Commerce Commission not expected until next year.
The companies lodged their application in May.
Mr Boggs said the company would soon be in a position to put the proposition to shareholders.
Fairfax Media NZ managing director Simon Tong said "Both businesses have a tradition of innovation and a combined business allows us to continue to invest in quality New Zealand journalism - ensuring a strong future for storytelling by Kiwis, about us, and for us."
The two businesses have a combined workforce of more than 3000 people and former New Zealand Herald editor Tim Murphy has estimated a merger could cost up to 750 jobs
NZME owns several North Island daily newspapers including the Herald, radio stations and websites, including nzherald.co.nz and Grabone.
Fairfax operates the country's largest print media network and six websites, including the country's most-visited news website stuff.co.nz.
Fairfax's media portfolio also includes newspapers The Press, The Dominion Post and Sunday Star Times among others, as well as magazines such as Cuisine, TV Guide and NZ House & Garden.
The Commerce Commission has pushed out its decision to mid-March, after receiving a large number of submissions opposing the plan. It said the merger plan was complex and it would in particular look at the impact on local and national news coverage, and whether prices might go up for advertisers and readers.