Investors punish Nine after Fairfax deal announcement

Nine Entertainment has dipped below the $2bn valuation mark this afternoon as investors digest the news of the merger with Fairfax.

Following this morning’s announcement, Nine’s shares slumped 6.5% on a delayed opening at 11am while Fairfax gained 13% and Domain jumped 9%.

Nine boss Hugh Marks said the merger would provide a “compelling opportunity”

Continued soft trading in Nine stock saw the company’s shares finish the day at $2.26 valuing the company at $1.97bn, wiping $200m off the company’s valuation from yesterday’s close.

Investors seemed not to share Nine CEO Hugh Mark’s view that the merged business would provide a compelling opportunity.

“For our shareholders, the merged business will generate an increasing percentage of its earnings from high growth digital businesses that provide a compelling opportunity to generate both incremental value and cash flow into the future,” Marks said this morning.

Fairfax shareholders however couldn’t continue their earlier enthusiasm for the deal with the stock easing back from its high of 84c shortly after commencing trading to finish at 84c.

The combined value of the companies at the close of trading was $3.8bn, down from $4.1 at the time of the announcement.

Meanwhile, 60% Fairfax owned Domain traded flat for most of the day after its initial 9% jump to finish at $3.33, up from 3.18 at yesterday’s close.


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