Australian media giant John Fairfax Holdings Ltd announced yesterday it will buy regional newspaper publisher Rural Press Ltd for up to A$2.87 billion (US$2.3 billion), the first takeover in Australia's media sector since lawmakers passed easier ownership rules.
The plan adds to the billions of dollars worth of deals announced since October when Canberra voted to deregulate the 20-year old media laws, and could also make it more difficult for potential suitors such as Rupert Murdoch to snare Fairfax.
In a statement to the Australian Stock Exchange, Fairfax said the Rural Press board had unanimously recommended the deal, which offers shareholders either two Fairfax shares and A$3.30 (US$2.60) cash per share or 2.3 Fairfax shares and A$1.80 in cash per share.
Both companies said the merger would create Australia's largest integrated metropolitan, regional and rural print and digital media business worth A$9 billion.
The Sydney-based Fairfax publishes the Sydney Morning Herald, the Australian Financial Review and the Age newspaper in Melbourne, while Rural Press produces the capital's flagship paper, the Canberra Times.
"Fairfax Media's role as a leading Australian media company has been greatly strengthened through this combination with Rural Press," Fairfax Chairman Ronald Walker said in the statement.
The takeover comes as Australia's top media players jockey for position ahead of the changes to ownership laws that take effect sometime next year.
Fairfax, which is not controlled by any one dominant shareholder, has long been considered a target for both local media players and international buyout groups.
Making haste
"We view Fairfax's haste to merge with Rural Press is to ensure that it is takeover proof, especially with the number of companies on its share register, News Corp and Seven Network Ltd," National Australia Bank credit analysts said in a note.
In October, Murdoch's News Corp took a 7.5 percent stake in Fairfax, a move Murdoch said was designed to "make it difficult" for another group to buy Fairfax, while Kerry Stokes' Channel Seven is sitting on a shareholder-stake below the 5 percent reporting threshold.
Fairfax said the Rural Press deal will reduce its reliance on its cyclical metropolitan newspapers and create synergies worth at least A$35 million per year in 12 months to 18 months.
"The long term growth profile for the merged group will exceed that of either company alone," Fairfax chief executive David Kirk said.
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