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Fairfax in major property, radio acquisitions

Fairfax Media has closed two major deals that will see it strengthen its asset portfolio in key radio and property markets. This week, Fairfax acquired 100 per cent of the issued shares in Metro Media Publishing Holdings (MMPH), which it will consolidate into Domain. That deal came off the back of Fairfax Radio Network’s (FRN)...

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Fairfax Media has closed two major deals that will see it strengthen its asset portfolio in key radio and property markets.

This week, Fairfax acquired 100 per cent of the issued shares in Metro Media Publishing Holdings (MMPH), which it will consolidate into Domain.

That deal came off the back of Fairfax Radio Network’s (FRN) merger with Macquarie Radio Network Limited (MRN), which saw the publisher acquire a 54.5 per cent share in an expanded MRN, as well as $18 million in cash.

Prior to its deal with MMPH, Fairfax held 50 per cent of MMPH shares, while 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.”

Fairfax gets together with Macquarie in merger

Fairfax’s radio merger with MRN will see it become the majority shareholder in a network that will comprise leading stations 2UE, 3AW and 4BC, 2GB and 2CH.

At the same time, Fairfax has sold Perth station 96FM to APN News and Media Limited for $78 million, bringing its haul from both transactions to $96 million.

The merger is expected to be completed in March 2015, subject to MRN shareholder approval.

Fairfax chief executive Greg Hywood described the merger as “a compelling transaction for both Fairfax and MRN” as it would create a national Talk radio network not previously available to advertisers.

“The merger provides both cost and revenue synergies from enhanced network and sales opportunities that will create a more efficient and effective network for News, Talk and Sports radio along with music stations,” Mr Hywood said.

“The merger brings together the greatest mix of talkback talent ever assembled in a single radio network. Leading presenters engage listeners with an unprecedented quality and diversity of commentary, entertainment and sport coverage.”

MRN executive chairman and chief executive Russell Tate will head the board of five directors of the combined entity as executive chairman, with two Fairfax nominees, one further MRN nominee and one Independent Director to make up the directors.

The 96FM sale is expected to be completed in February 2015, subject to approval from the Foreign Investment Review Board.

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