Next Media Ltd will buy Hong Kong's top weekly magazine and its No. 2 daily newspaper from its founder Jimmy Lai by issuing him about HK$2.6 billion (US$333 million) in new shares, a company executive said.
The purchase of Next Magazine, Apple Daily, and two other titles will be announced after the stock exchange gives the final approval today, said the executive, who asked not to be identified. While Next Media Deputy Chairman Andrew Chow said the stock exchange will consider the asset injection today, he wouldn't comment further.
The publications are a lifeline for Next, which has been losing money since Lai formed it by taking over an unprofitable printing company in 1999 and using it for a foray into Internet publishing. The acquisition, delayed by objections from the exchange for almost a year, will make Next shares more attractive as Lai tries to raise money to promote a Taiwan edition of Next.
"The asset injection will turn Next into a completely different company," said Mavis Hui, an analyst with Kim Eng Securities Ltd. in Hong Kong. "Profit from the publications more than compensate for losses from Next's Internet businesses."
Next shares jumped HK$0.025, or 9.6 percent, to HK$0.285, on top of an 18 percent surge Wednesday.
The four titles, also including Sudden Weekly and Eat, Travel & PC Weekly, earn about HK$300 million a year, analysts say. They will help Next earn its first profit this fiscal year. Lai had forecast Next to lose money for at least 18 more months because of the start-up costs from the Taiwan edition of Next Magazine launched in May.
In the year ended March, Next lost HK$146 million after writing off Web investments. Next runs online editions of the newspaper and magazines, as well as some printing businesses. Chow said the company is already planning a sale of new shares to the market to raise cash.
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