Australian Competition and Consumer Commission (ACCC) gives a green card to Nine Entertainment and Fairfax Media merger.
In a media release dated 8 November 2018, ACCC stated that it will not oppose the merger between Nine Entertainment and Fairfax Media, proposed in July 2018.
The decision comes after the thorough examination of market competition across Australian news and media industry. Watchdog ACCC has addressed the Australian news industry, including current affairs reporting, and online news to determine if the merger would substantially lessen competition in the creation and provision of Australian news content.
ACCC Chair Rod Sims stated that although the merger between these two giant media companies raised several critical issues, and will likely reduce competition, it has been concluded that the proposed merger is not likely to greatly lessen competition in any market in breach of the Competition and Consumer Act.
On 26 July 2018, Nine and Fairfax entered into Scheme Implementation Agreement to undertake merger following which Nine shareholders will clutch 51.1% holdings in the combined entity whereas Fairfax shareholders will hold remaining 48.9%.
Commenting on major players in Australia’s media industry, Mr. Sims stated that this merger can be seen to reduce the number of news focused Australian companies from five to four. Post the merger, only Nine-Fairfax, Seven West Media, News/Sky and the ABC/SBS will be the four major players composed of large number of journalists across Australia.
The regulatory body ACCC indicated the gap between Nine’s and Fairfax’s target audience and nature of operations. The commission confirmed that Nine and Fairfax “do not compete closely with each other” as Nine’s current affairs programs targets mass audience while Fairfax’s print content tends to provide more detailed coverage, tapping the demographically differentiated audience. However, there has just been one direct overlap between both the companies and that’s online media.
ACCC stated that underpinned by various measures, there is a likelihood of combined Nine-Fairfax to become one of the largest online providers of Australian news, alongside News Corp Australia and ahead of the ABC.
Under the proposed transaction, Fairfax shareholders will receive 0.3627 Nine share plus $0.025 for each Fairfax share held. In the absence of superior offer and positive conclusion of Independent Expert’s report, the Directors of Fairfax unanimously recommended that Fairfax shareholders vote in favor of the Scheme. The approval of Fairfax shareholders is reported to be received at the meeting due on 19 November 2018.
The scheme is slated to be implemented by 7 December 2018. However, besides shareholders’ approval, Final court approval due on 27 November 2018, and satisfaction of certain other conditions remains pending to the completion of proposed transaction.
Despite getting ACCC approval to merger with Fairfax, NEC traded flat today. The share price of Nine Entertainment last traded at $1.680 with market capitalization of $1.46 billion as on 8 November 2018. Over the past one year, the share price of Nine Entertainment Co. Holdings Limited (ASX: NEC) has gone up by 11.63%.
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