NZME can steer own course, chief says

By Grant Bradley, Paul McBeth

The transaction would see a one-for-seven share consolidation in the Australian company, then a distribution of NZME shares to those investors on a one-for-one basis. Photo / Jason Oxenham
The transaction would see a one-for-seven share consolidation in the Australian company, then a distribution of NZME shares to those investors on a one-for-one basis. Photo / Jason Oxenham

Setting up NZME up as a standalone New Zealand business will give it more opportunity to prioritise its strategy and investments in tune with local markets, says chief executive Michael Boggs.

Shareholders of APN voted overwhelmingly to approve the demerger of NZME from Sydney-based APN this morning.

Boggs described it as a "significant milestone" which would result in NZME become a separately listed business on the New Zealand and Australian stock exchanges.
NZME owns the New Zealand Herald and nzherald.co.nz as well as radio stations including NewsTalkZB and e-commerce site GrabOne.

Boggs said that being part of the wider APN group had created competing demands on capital.

"The good thing now is that as a separate listed entity we do have the ability to manage our own capital and our own investment decisions for the New Zealand business,'' he said.

"We can now make the investments or focus on the area that we can think will give a return to our New Zealand shareholders based on what the customers and audience in New Zealand want.''

The deal still need Overseas Investment Office approval which was a focus at the moment.
"We would ideally receive that in the next two weeks which would allow us to be listing on the exchange on June 27,'' he said.

APN shareholders will receive new shares in NZME in proportion to their existing APN shareholding,

while retaining their existing APN shares. APN will also undertake a one for seven share consolidation and shares in NZME will then be distributed to eligible shareholders on the basis of one NZME share for one APN share.

The demerger was independent of proposed merger of NZME with Fairfax Media's New Zealand operations.

The two companies have filed an application with the Commerce Commission to merge their businesses, which they claim is needed to fend off global digital advertising giants such as Google and Facebook. The commission will look at whether there are separate print and digital markets for both readers and advertisers and if other online offerings are real competitors to New Zealand's stuff.co.nz and nzherald.co.nz websites.

Deloitte has said an independent NZME would become more attractive as acquisition target, but Boggs said "we certainly haven't set ourselves up to be a takeover target."

During the next two weeks he would meet current and potential future shareholders on a roadshow which would include Auckland, Wellington Sydney and Melbourne.

"From my perspective a key thing is having New Zealand shareholders on the register - APN shareholders will become NZME shareholders but we will see some transition."

The demerger was supported by 99.98 per cent of shareholders.

APN News & Media chief executive Ciaran Davis said he wasn't surprised at the overwhelming support and part of APN's focus would be helping NZME make the transition to be a standalone company.

From my perspective a key thing is having New Zealand shareholders on the register - APN shareholders will become NZME shareholders but we will see some transition.

The New Zealand company was taking just over $100 million in debt - about a third of that owed by the group.

Davis said APN would continue to provide support for a tax case being fought in New Zealand with the IRD.

Following the demerger, Sir John Anderson will resign from the APN Board to become NZME's

chairman, Peter Cullinane will join the NZME board while retaining his place on the APN board to ensure a smooth transition and Carol Campbell, who is a chartered accountant will join the NZME board.

Head of private wealth research at Craigs Investment Partners Mark Lister said the demerger was generally positive for NZME.

"While there will presumably be some uplift in corporate costs for the company to operate as a stand-alone entity, it will be freed from the burden of being run out of Australia as a small part of the bigger APN group. This should hopefully see the company be able to act in a more agile way, with more flexibility," he said.

"The New Zealand economy was in much better shape than in Australia and being in control of their own destiny should allow NZME to capitalise on that, despite plenty of challenges in the sector."

Read APN chairman Peter Cosgrove's speech here:

Read the APN releases describing the de-merger here.

- BusinessDesk

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