Court of Appeal rejects merger of Fairfax Media’s Stuff and NZME
Fairfax Media’s New Zealand arm Stuff and NZME Limited will not be able to merge, the Court of Appeal has ruled.
The two businesses, which first flagged intentions to merge in 2016, hit another blockage today, after the Court of Appeal rejected the merger proposal.
Fairfax Media and NZME commenced discussions about the merger in 2016
Under the initial plans, NZME would pay NZ$55m to acquire Fairfax New Zealand’s assets, with Fairfax Media Australia gaining a 41% share in the company. But the initial merger proposal was blocked by the NZ Commerce Commission (NZCC) in May of 2017, due to concerns over diversity of voice. The two businesses decided to appeal the decision in the High Court, but in December last year, the High Court decided the merger could not go ahead.
Adamant the merger was in the best interests of shareholders and the New Zealand media industry, Fairfax Media and NZME appealed the High Court’s decision. Today, the Court of Appeal declined the merger proposal.
NZME CEO, Michael Boggs, said he was disappointed by the decision, arguing the merger is in the best interests of NZME’s shareholders and the New Zealand media industry.
Today, Fairfax Media CEO Greg Hywood told investors the decision was “not the outcome” the business wanted.
“We believe the merger as proposed would have delivered significant synergies and sustained at-scale journalism in New Zealand for many years,” Hywood said.
“We remain focused on our New Zealand business, and will do everything we can to ensure Stuff continues to implement its strategy and continues to serve our New Zealand communities.
“I would like to thank all our people for working so rigorously and effectively through a long period of uncertainty. Stuff is in the hands of talented, passionate people who are acting decidedly and determinedly to create a prosperous future for the business,” he added.
Both businesses will review the judgement and NZME will consider its options.
The third rejection of the merger proposal comes as Fairfax Media awaits a merger with Nine.
When Nine announced its merger proposal, which is waiting on Australian Competition and Consumer Commission (ACCC) and shareholder approval, Hywood told investors: “We’ve gone through obviously the regulatory process and into the courts on this and we’re not expecting any result on the appeal before late the end of the year.”
Hywood added the company was free to look at other consolidation opportunities in New Zealand, noting it was actively pursuing them.
Nine CEO Hugh Marks did not provide a specific update on the business at the time.
Stuff’s assets include stuff.co.nz, a share of neighbourly.co.nz and more than 60 metro, Sunday, regional and community newspapers. NZME’s assets include the New Zealand Herald and six regional daily papers, the NZME radio network, and e-commerce and digital classified sites GrabOne, HeraldHomes and driven.co.nz.
NZME and Fairfax proposed merger timeline:
2016:
11 May: APN News & Media in talks with Fairfax New Zealand over merger of NZME
29 June: NZME shares plummet after listing as former parent APN News & Media also takes a hit
7 September: NZME to pay $55m for majority of Fairfax NZ assets under merger plans
8 November: NZ Commerce Commission signals it will block NZME-Fairfax NZ merger due to diversity of voice concerns
2017:
3 May: NZ competition watchdog rejects Fairfax and NZME’s newspaper mega-merger
26 May: Fairfax Media and NZME fight merger rejection with High Court appeal
19 December: Fairfax Media and NZME merger will not go ahead, High Court rules
5 February: Fairfax, Stuff and NZME to appeal High Court decision which blocked merger
