Estimated read time: 2-3 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
- (Updating to include further details)
SYDNEY (XFN-ASIA) - John Fairfax Holdings Ltd, Australia's second largest newspaper publisher, said it has made an offer to take over Rural Press Ltd, valuing the regional media group at up to 1.7 bln aud.
Fairfax said it plans to offer 3.30 aud in cash and two Fairfax shares for each Rural share or 1.80 aud in cash and 2.3 Fairfax shares. The company said its offer translates to 13.78-14.35 aud a share.
In addition, Rural Press will pay a special dividend of 0.57143 aud per share.
Fairfax said the bid has been recommended by the Rural Press board.
It said synergies of at least 35 mln aud a year in 12-18 months are possible.
Fairfax closed up 0.05 aud at 5.21 yesterday, while Rural Press was steady at 11.75 aud, giving it a market capitalization of 1.39 bln aud.
Fairfax chairman Ron Walker said in a statement that the merger meets his group's investment criteria by advancing strategic growth and increasing shareholder value.
"With an enterprise value of over 9 bln aud, we are poised for stronger growth and further strategic expansion of our brand in Australia and overseas in the years ahead," Walker said.
"This merger has been contemplated by both companies over a number of years. We look forward to the successful completion of the transaction."
The proposal comes ahead of changes to Australia's media ownership laws which come into force next year, removing cross ownership and foreign ownership restrictions.
The changes have already prompted a number of corporate moves including News Corp buying a 7.5 pct stake in Fairfax and television broadcaster Seven Network Ltd also taking a small stake in Fairfax which has itself been seen as a takeover target because of the changes to ownership laws.
Rural Press chairman John Fairfax, a member of the family that founded Fairfax in the 19th century, said the merger will provide opportunities for Fairfax to leverage its online media businesses and expertise across regional communities throughout Australia.
Fairfax said it will maintain its dividend payout ratio but didn't say what the current ratio is.
The merger proposal will be through a scheme of arrangement which will require approval by Rural Press shareholders.
(1 usd = 1.27 aud)
bruce.hextall@xfn.com
blh/mas
Copyright 2006 AFX News Limited. All Rights Reserved.
