Fairfax and Macquarie Radio Network strike merger deal
Fairfax Media and Macquarie Radio Network have agreed to merge in a deal that will see Fairfax take a majority shareholding of 54.5 per cent in a new enlarged listed entity.
The agreement, which had been widely expected, will bring together seven talkback radio stations, with Ray Hadley and Alan Jones both staying with the company.
Uncertainty surrounding their retention scuppered a deal earlier this year.
The enlarged network will include 2GB and 2UE in Sydney, 3AW and Magic 1278 in Melbourne, 4BC and Magic 882 in Brisbane and 6PR in Perth.
It does not include Fairfax’s 96FM which, in a seperate deal, has been acquired by APN News & Media for $78m.
MRN, which will remain the listed entity, will also sell 2CH.
The deal, which is subject to conditions, is expected to be completed by March has been given the support of its major shareholders John Singleton and Mark Carnegie.
Russell Tate, executive chairman and chief executive of MRN, will head the merged operations for an interim 12 months, supported by FRN managing director Adam Lang, who will be appointed chief operating officer. In addition to Tate, the Board of Directors will comprise a second MRN nominee, two Fairfax nominees and one Independent Director.
Tate said: “The combination of the two networks will unlock significant cost and revenue synergies, and provide national advertisers with ease of access to the increasingly important 45 – 69 year demographic which all seven stations in the combined group attract.”
MRN majority shareholder John Singleton added: “Joining forces is a win for both MRN and FRN. Radio was the world’s first form of social media, and the only one I understand.”
Fairfax chief executive Greg Hywood described it as a “compelling transaction”.
“The merger creates a genuine national talk radio network that was not previously available to advertisers,” he said. “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.”
Full ASX statement from MRN:
Macquarie Radio Network Limited [ASX:MRN] (MRN) together with Fairfax Media Limited [ASX:FXJ] (Fairfax) today announced they have entered into a merger implementation agreement (MIA) to unite their respective radio businesses. A summary of the key terms of the MIA is attached to this announcement.
MRN will acquire 100% of the share capital of Fairfax Radio Network Pty Limited (FRN) in exchange for the issuance of new MRN ordinary shares to Fairfax and an equalising cash payment of approximately $18 million based on the net debt positions of FRN and MRN at completion. On completion of the transaction, existing MRN shareholders will hold 45.5%, and Fairfax will hold the remaining 54.5% of the fully diluted MRN ordinary shares on issue.
The proposed ‘merger of equals’ brings together Australia’s leading news-talk radio operations which occupy number one overall ratings’ positions in Sydney (MRN’S 2GB) and Melbourne (Fairfax’s 3AW). The joint venture will also consolidate the operations of an additional five radio stations across Australia: 2UE (Sydney), Magic 1278 (Melbourne), 4BC (Brisbane), Magic 882 (Brisbane) and 6PR (Perth). As part of the transaction and due to regulatory requirements, MRN will seek to divest 2CH and Macquarie Regional Radio network. The transaction does not include FRN’s 96FM (Perth) station.
Russell Tate, currently Executive Chairman and CEO of MRN, will head the merged operations as Executive Chairman for an interim 12 months supported by Adam Lang, currently FRN’s Managing Director, who will be appointed Chief Operating Officer. In addition to Tate, the Board of Directors will comprise a second MRN nominee, two Fairfax nominees, and one Independent Director.
Tate commented that “the combination of the two networks will unlock significant cost and revenue synergies, and provide national advertisers with ease of access to the increasingly important 45 – 69 year demographic which all seven stations in the combined group attract.”
John Singleton, currently the major shareholder of MRN, said: “Joining forces is a win for both MRN and FRN. Radio was the world’s first form of social media, and the only one I understand.”
Approval of the transaction by MRN shareholders is required under the Corporations Act and ASX Listing Rules. Shareholders will receive an Explanatory Memorandum, including a Notice of Meeting and Independent Expert’s Report, for an Extraordinary General Meeting expected to be held in March 2015.
The proposed transaction is subject to a number of other conditions precedent, which will be detailed in the Explanatory Memorandum that accompanies the Notice of Extraordinary General Meeting. For example, the transaction remains subject to certain regulatory approvals. The transaction is expected to complete around March 2015 pending the satisfaction of the conditions.
Each of MRN’s directors intends to recommend that MRN shareholders vote in favour of the proposed transaction at the Extraordinary General Meeting, subject to no superior proposal being received.
Each of John Singleton and Mark Carnegie has indicated that, as the major shareholder and a substantial shareholder, respectively, they will support the proposed transaction and vote in favour of it at the upcoming Extraordinary General Meeting, assuming the various conditions in the MIA are satisfied, the Independent Expert determining that the proposed transaction is in the interests of all shareholders and no superior proposal is received.
MRN is being advised by M. H. Carnegie & Co., Minter Ellison, Gilbert + Tobin and KPMG. Fairfax is being advised by Macquarie Capital, Herbert Smith Freehills and McGrathNicol.
2ue pays the price for too many chops and changes. Sad for the staff who will suffer while the management get payouts.
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I wonder when Fairfax will do something that gives a sense of a future? This is the predictable ending to its ridiculous radio acquisition and another deadwood deal. If as forecast they now pay a whopping amount for catalanos business then the board and management should go. In fact they might well ask why this business needs overhead of the scale it has, given the results it delivers.
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Very few of the Fairfax executives deserve senior positions in the merged entity.
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As 2UE is something of a basket case, it’ll be interesting to see what changes can be made to raise their mediocre ratings. While 2GB is overtly right wing, what will be the political policies thrust upon 2UE management?
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I find it incredible that both Alan Jones and Ray Hadley who have been very upfront about other issues both domestic and international have not discussed what this means in DETAIL, because Fairfax has not shown itself to be of the same political persuasion as 2GB. They are number one because their listeners enjoy the same side of politics and I find it concerning that after Mr. Tate’s year is up things will change.
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Hywood shaping Fairfax for the future. Domain in strong shape under Catalano and new team. Radio set.
Hywood woes now focus on the management of the so called ‘jewel in the crown’ the publishing business. New visionary MD and sales team required. Until then, we watch with baited breath.
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Linnell and 2Ue will finish. Bring him back to run the Sydney Morning Herald and stop the stuff ups I say. But I just work at the coalface.
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Considering how the merger previously fell over six months ago because Fairfax refused to employ Jones and Hadley it looks like we will eventually be free of both shock jocks when their contracts expire. Hadley went to air with a blistering, expletive-filled attack on Fairfax and 2UE when merger talks were happening months ago.
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It won’t be easy. Singelton knew advertising but thinks he knows radio but reality he just employs the most expensive and successful jocks. Easy enough when the dollars are around and fine while Hadley and Jones are around (and alive!) and the much smarter people running 3AW prop things up. But their big problem is that people like me in their demographic listen to podcasts. The meter is on…..
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The Fairfax ritual goes on and on. Clearly shareholders are clueless or they would have changed the board and management ages ago (perhaps before the stupid radio buy). Investors deserve what they get. But the public is going to be left with just News Corp media when inevitably this Fairfax debacle plays out.
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Mr Tate
Time to bringg Rugby League to 2UE when next Rugby League Radio Rights Deal comes up and 2UE can gain Rugby League from either both of 702 ABC Sydney and/or 2MMM then sign all 702 ABC Sydney & 2MMM Staff to 2UE first in March 2015 sign John Stanley, Stuart Bocking, Justin Smith, Clive Robertson, Luke Bona, John Cardogan, George Moore, Paul B Kidd, Tim Webster & Pete Graham and all fillins from 2UE then sign to 2UE all Nova 969/.SmoothFM 95.3 staff to 2UE so that while 2UE losing current 2UE listeners to 2GB wihile 2UE gaining listeners & revenue from Nova 996/SmoothFM 95.3.
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