Australian publisher John Fairfax Holdings is to buy New Zealand's biggest internet service in a $NZ700 million ($462.4m; €384.3m; £263.5m) deal.

Trade Me, the Kiwi version of eBay, accounts for more than 60% of NZ web traffic, with 1.2m members who are expected to host 35m auctions this year. The company's founder and ceo Sam Morgan will continue to run the business.

Fairfax, which publishes the flagship Sydney Morning Herald and The Age in Melbourne, has made the acquisition as its struggles with a difficult newspaper advertising market.

The company has reported a 4.6% fall in net profit to A$119.9m ($82.4m; €74.1m; £50.8m) for the first half of 2005/06, after job cuts and a $4.4 million gain from the sale of AAP Communications Services.

Excluding those non-recurring items, net profit increased by 5.2% to A$124.8m - in line with analysts' expectations.

Ceo David Kirk says the company is focused on defending and growing its traditional print business, despite a 3% fall in newspaper revenue,

But the business's focus will increasingly turn to the internet - Fairfax Digital's revenue rose by 66% to A$42m.

Comments Kirk: "Fairfax Digital's outstanding performance - both financially and in competitive terms - shows it is a major force in online markets in Australia. We intend for it to continue to enjoy significant growth in its news and classifieds business."

Data sourced from Sydney Morning Herald; additional content by WARC staff