The merger discussions were revealed at APN’s annual general meeting on Wednesday, together with plans to demerge its integrated New Zealand business, NZME.
The demerger will create two independently listed companies and was evaluated by the board against alternatives including an initial public offering and a divestment.
“After considering the advantages, disadvantages and risks of each option, the APN directors unanimously consider that the demerger is in the best interests of APN shareholders and we believe will give greater market recognition for each company,” APN chairman Peter Cosgrove said.
A shareholder meeting to approve the demerger and share consolidation is expected to be held on Thursday, June 16, with a listing on the NZ stock exchange by early July.
Along with the demerger, details were announced of a $182 million capital raising by APN to pay down debt.
A combination of Fairfax NZ and NZME would create a media company of greater scale and more firepower to ward off threats to market share posed by international players.
The merger would be subject to regulatory approval from the New Zealand Commence Commission, with a likely case to be mounted on a strengthened local entity that could compete with the likes of Google and Facebook.
Fairfax chief executive Greg Hywood said the merger “would enhance the position the businesses are in to continue to deliver high quality, local content to audiences now and in the future”.
Fairfax owns The Dominion Post and The Press in New Zealand, as well as TV Guide magazine and top-rating website Stuff.co.nz.
APN chief executive Ciaran Davis said the combination of the two businesses would provide “the necessary capability to continue investing in high-quality, local news, sport and entertainment at a time when advertiser commercial investment continues to fragment across international media platforms that do not invest in local content”.
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