APN News & Media announces NZME demerger, confirms Fairfax NZ merger talks

APN has announced a proposal to demerge its New Zealand business NZME to create two independent media companies

APN News & Media has announced a proposal to demerge its New Zealand business NZME to create two independent media companies. Meanwhile APN confirmed that it is in talks with Fairfax regarding a potential merger of their respective NZ businesses, and is aiming to complete the merger by the end of calendar 2016.

Highlights of the proposal include:

  • Proposed Demerger of NZME to APN shareholders (Demerger)
  • NZME to be listed on NZX (primary listing) and ASX (foreign exempt listing)
  • Enables APN to focus on its Australian growth media assets of radio and outdoor
  • NZME will be a leading integrated media and entertainment business in New Zealand
  • Independent Board and management team for each business – Sir John Anderson appointed Chairman of NZME
  • Eligible APN shareholders will receive one share in NZME for each existing APN share
  • Prudent and sustainable capital structure for APN (post Demerger and Entitlement Offer) and NZME
  • APN to also undertake a 1 for 7 share consolidation (Share Consolidation)
  • Shareholder meeting to approve the Demerger and Share Consolidation to be held on 16 June 2016
  • APN directors consider that the Demerger is in the best interests of APN shareholders and recommend that shareholders vote in favour of the Demerger
  • Independent expert has concluded that the Demerger is in the best interests of APN shareholders
  • APN to raise approximately $180 million through a fully underwritten 1 for 3 accelerated renounceable entitlement offer with retail entitlements trading (Entitlement Offer)
  • APN and Fairfax Media Limited (Fairfax) separately announced entry into exclusive discussions regarding the potential merger of their respective New Zealand businesses

APN released the following statement today:

APN News & Media Limited [ASX, NZX: APN] today announced a proposal to demerge 100% of its New Zealand business, NZME, to APN shareholders and list NZME on the NZX with a secondary listing on the Australian Securities Exchange (ASX). As a result of the Demerger, eligible APN shareholders will receive one new share in NZME for each existing APN share they hold, while retaining their existing APN shareholding. APN will continue to be listed on the ASX and NZX.

The Demerger will create two independent media companies:

  • APN – a growth oriented media and entertainment company consisting of: ARN, Australia’s leading metropolitan radio network1; Adshel, the #1 street furniture advertising network in Australia and New Zealand2; Cody Outdoor, an outdoor advertising business in Hong Kong; and ARM, a leading regional media business in Australia
  • NZME – a leading integrated media and entertainment business in New Zealand, operating some of the country’s most recognisable publishing, radio and digital brands

APN after the Demerger will remain focused on pursuing growth opportunities in radio and outdoor and NZME will continue to develop its integrated media platform to drive further growth.

APN Chairman Peter Cosgrove said “The proposed Demerger represents a natural progression of NZME’s transformation over the past two years and the most effective method of separating NZME with high execution certainty. NZME currently operates as a discrete, independent media business in a separate geographic market with limited day-to- day connectivity with APN.

For APN, the Demerger ends our long and successful association with the New Zealand publishing and radio industry that first commenced by buying a stake in The Radio Network in 1997, followed by the acquisition of The New Zealand Herald and numerous other media publications in 2001. It also represents a big opportunity for APN, where for the first time we are able to really focus and capitalise on our high growth media assets across the Australian radio and outdoor sectors.

The APN Board believes that the Demerger will enhance shareholder value over time by enabling independent focus for each company to better pursue their own strategic priorities and growth opportunities, and adopt independent capital structures reflecting their operational requirements. It provides the opportunity for the market to recognise the independent value of both businesses over time, and enables investors to make separate investment decisions with respect to each company.”

APN Chief Executive Officer, Ciaran Davis, said “The Demerger will allow APN to drive growth and investment across the two outperforming media sectors in Australia, radio and outdoor. It presents a significant opportunity for APN to capitalise on our leading media brands and market positions, with radio and outdoor a strong natural fit for integrated advertising campaigns.

For NZME, the Demerger has been made possible due to the excellent progress achieved to integrate some of New Zealand’s most recognisable media brands into one central newsroom. The transformation plan has delivered on financial and operational targets to date and has repositioned NZME as an audience centric, content driven media and entertainment business.”

NZME’s Chief Executive Michael Boggs said “With our experienced management team in place, NZME is well positioned to continue its transition across to digital advertising and new revenue streams from transaction and experiential channels. We will be independently structured and funded to capitalise further on the changes we are making.”

Potential merger of NZME and Fairfax New Zealand

APN and Fairfax have entered into exclusive discussions regarding the potential merger of their respective New Zealand businesses. If completed, the combined company will be a leading New Zealand media business, offering depth of news, sport and entertainment coverage across a diverse mix of channels including print, digital and radio.

Fairfax and APN/NZME have commenced preliminary discussions around a potential transaction structure. The transaction remains subject to agreement by the respective Boards of the businesses as well as all necessary regulatory consents, including New Zealand Commerce Commission, and any necessary shareholder approvals. The parties intend to work towards completion of the merger by the end of calendar 2016 subject to all approvals. The discussions are subject to exclusivity provisions with standard fiduciary and other carve-outs.

APN has entered into the exclusive discussions independently of the Demerger. If the Demerger is completed, NZME is expected to continue pursuing the proposed transaction with Fairfax and if the Demerger does not proceed, APN intends to continue discussions.

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