Fairfax acquisition boost for Domain

Fairfax Media has acquired 100 per cent of the issued shares in Metro Media Publishing Holdings (MMPH) and will consolidate it into Domain.

Fairfax previously held 50 per cent of MMPH shares, while the foundation MMPH shareholders held the remaining half.

Consideration for the transaction will total $72 million, comprising $18.5 million in cash and the remainder in Fairfax shares, according to a statement by the publisher to the Australian Securities Exchange.

Fairfax said the shares would be issued after the company’s half-year 2015 results in mid-February at a value of 78 cents per share, which was the volume-weighted average price of Fairfax shares up to December 2014.

The operations of MMPH will fall under the responsibility of Domain Group chief executive Anthony Catalano, who will continue his role and has elected to take the consideration due to him in Fairfax shares.

The consolidation is expected to simplify the operations of the publisher’s growing property services segment, comprising more than $300 million in revenue, and enhance the national rollout of MMPH’s agent equity model which has seen success in Victoria.

MMPH has majority interests in 15 weekly premium real estate and lifestyle magazines and newspapers in Victoria, including The Weekly Review and Star Weekly, which reach around one million households, as well as digital property business reviewproperty.com.au, which combines property listings and market data with lifestyle content like restaurant reviews, schools and local services.

The co-shareholders in those businesses are real estate agents themselves who have financial interests via the MMP Group equity structure, which will continue under the new ownership based on its success for MMPH and the hundreds of agents who have invested.

The founding real estate agent shareholders of MMPH will take 65 per cent of their consideration in Fairfax shares, with 68.5 million new Fairfax shares to be issued as part of the transaction.

The consolidation is a continuation of Domain’s “aggressive national expansion”, capping a series of significant developments over the last 12 months, according to Fairfax chief executive Greg Hywood.

“In December 2013, we acquired property data and mapping provider, Property Data Solutions, and in July 2014 we acquired leading Canberra-based online property portal Allhomes,” Mr Hywood said.

“The Domain group is growing strongly, delivering revenue growth of 21 per cent in the first four months of FY15 across its broad suite of digital, print, software and data products servicing the residential and commercial real estate markets.”

Since the MMPH joint venture launched in December 2011, its EBITDA has jumped from $4 million in the 2012 financial year to $14 million in 2014, and is “on target for strong growth” in 2015.

“The local gloss magazine market continues to be a strong marketing vehicle for real estate vendors and agents because of its intensive local distribution,” Mr Hywood said.

Mr Catalano said the combined efforts of MMP Group and Domain had seen them take “enormous ground” in Victoria as they worked closely with agent partners.

“Our Domain print products are growing, domain.com.au’s depth products are the number one choice in a large number of key markets, and at the same time MMP is growing faster than anyone in the sector,” Mr Catalano said.

“The agent equity model works. It helps bring better products, more competition, more choice and more innovation to the market and property vendors and buyers are the big winners.

“We are starting to roll out the agent equity model nationally, and over the next 12 months we expect to gain significant traction as we deepen our relationships with agents around the country. The success of the Victoria model has been closely observed by agents around the country and many are now keen to embrace the model.”

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