Fairfax Makes First Post-Liberalization Media Buy

07 December 2006

SYDNEY: The first trickle in what observers down under believe could become an acquisition torrent was announced Wednesday. John Fairfax Holdings, publisher of (among others) the Sydney Morning Herald, Australian Financial Review and New Zealand Daily Herald, said it had agreed to buy regional newspaper publisher Rural Press.

It is the first takeover in the Australian media sector since the government voted in October to liberalize the 20-year old media laws. JFH will pay up up to A$2.87 billion (U$2.26bn; €1.69bn; £1.14bn) for its new property.

Fairfax itself has been considered vulnerable to takeover since the rules were relaxed, although its purchase of Rural Press shores-up its defences against a hostile bid.

Opines an analysts' note from National Australia Bank: "We view Fairfax's haste to merge with Rural Press is to ensure it is takeover-proof, especially with the number of companies on its share register, [among them] News Corporation and Seven Network.

Enthuses Fairfax ceo David Kirk: "The long term growth profile for the merged group will exceed that of either company alone. The merged group will have exceptional cash flow, a strong dividend yield, and it will benefit from the operating disciplines and expertise of an experienced management team."

Data sourced from Wall Street Journal Online; additional content by WARC staff