Stuff owner Sinead Boucher, who bought the company for just $1 five years ago, has announced a partial sale of the company’s digital arm to Trade Me – a likely lucrative multi-million-dollar payday.
As Media Insider first revealed in March, Trade Me – which has been in an intense battle with NZME’s OneRoof property platform - is buying into Stuff Digital, including the Stuff news website.
Details of the price paid by Trade Me for the 50% stake have not been revealed in a press statement today. The parties say this is confidential but it is likely to be in the millions.
“This is the first time since the management buyout of Stuff five years ago that I have accepted an equity partner into the business,” Boucher said in the statement.
The timing comes on the fifth anniversary of Boucher buying Stuff for the nominal $1 sum from Australia’s Nine – and on the same day that shareholders from rival media firm NZME gather for their annual meeting.
The Stuff-Trade Me deal is likely to be the focus of some attention at today’s NZME meeting.
Boucher said it was “important to me that we found the right partner at the right time in our growth strategy”.
Under the agreement, Stuff’s property section will become Trade Me Property, with listings, advertisements and some content shared across both platforms.
Trade Me has been under pressure in an increasingly competitive digital property classifieds market, where NZME’s OneRoof property portal has overtaken Trade Me Property in pure website audience terms in several recent months. Trade Me Property (with an audience of 779,000) did take back the lead from OneRoof (747,000) in April.
Boucher said editorial independence and integrity were “intrinsic” to Stuff and “Trade Me is committed to upholding Stuff’s editorial code of ethics and practice”.
The companies announced Boucher would chair the new Stuff Digital Ltd board, which will include Trade Me chief executive Anders Skoe, “with equal representation from both organisations”.
“Stuff will retain operational control of the business through the chair’s casting vote. The 50% stake in Stuff Digital excludes Stuff Group’s Masthead Publishing business, Events and Neighbourly.”
The deal – announced shortly after Media Insider sent questions to both companies this morning – “is subject to some standard conditions and expected to complete within the next few months”.
All financial details of the investment remained confidential, the statement said.
Skoe said the acquisition brought together “two highly successful Kiwi brands”.
“This is an exciting investment to accelerate our growth.”
Boucher said the deal provided “for brilliant new opportunities together, and for Stuff Group, continued investment in technology and talent for the future”.
Skoe said the advantages of the deal were clear, particularly for Trade Me Property.
As Media Insider reported in late March, the two companies have been in talks for what would represent a bold digital media move and a potentially big payday for Boucher.
Neither company would comment specifically at the time and the report was later followed up by Stuff itself.
In December, Stuff confirmed it had officially separated Stuff into two companies – Stuff Digital, which looks after the free Stuff and Neighbourly websites, and Stuff Masthead Publishing, which looks after the company’s publishing assets, including The Post, The Press and Sunday Star-Times newspapers and paywalled websites.
A notice to the Companies Office on February 7 revealed a change in the number of shares for Stuff Digital – Boucher went from holding the single share in the business to being the sole holder of one million shares.
Devon Funds head of retail Greg Smith told RNZ in March that increasing the number of shares might be a move to bring others into the company ownership.
“Typically, when you have just one shareholder, a motivation for issuing new shares is potentially when you want to bring on additional shareholders.”
Stuff did not answer a set of specific Media Insider questions in March but said in a statement: “As in all previous inquiries regarding potential third parties interested in investing in the Stuff Group of businesses, we would never comment on whether discussions had been held or not.”
Skoe also did not answer the specific questions at the time but said in a statement: “Trade Me has an ongoing commercial relationship with Stuff, which in recent months has included discussions regarding content sharing among other collaborations”.
In response to a follow-up question asking specifically, again, about a possible acquisition, Trade Me said: “We won’t be commenting further.”
Earlier in March, it was revealed NZ Herald owner NZME had been in talks with Stuff about buying the other arm of the company – Stuff Masthead Publishing.
Those talks were halted in light of what was then a brewing board battle at NZME. However, peace has since broken out at NZME, with a new board set to be confirmed today. It remains to be seen whether the new board is keen to resurrect talks with Stuff for the mastheads.
A deal might yet be subject to Commerce Commission consideration.
The commission has been approached for comment about the acquisition.
In March, a spokeswoman said: “We haven’t had any discussions with the parties but can provide some broad comments about the merger clearance regime.
“Filing for merger clearance in New Zealand is voluntary, so the decision whether to seek clearance from the commission for a transaction sits with the merger parties.
“However, if parties do not file for clearance, and the commission forms the view that their transaction may have, or may have had, the effect of substantially lessening competition, the commission can open an investigation into the transaction and ultimately take enforcement action, which could result in significant penalties or a court reversing the transaction.
“We assess mergers using the substantial lessening of competition test. This test asks whether a merger is likely to substantially lessen competition by comparing the likely state of competition if the merger proceeds with the likely state of competition if the merger does not proceed.
“We will give clearance to a proposed merger if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a New Zealand market.”
Trade Me, founded by Sam Morgan in 1999, has become New Zealand’s biggest online auction and digital classifieds site. A buy-in to Stuff Digital is somewhat of a back-to-the-future move.
One of Stuff’s earlier owners, Fairfax, bought Trade Me from Morgan for $700 million in 2006.
Trade Me was partially listed in 2011, with Fairfax retaining 51% of the business. The media company sold its remaining stake in December 2012, for A$616m, with proceeds from the sale used to reduce Fairfax’s net debt.
Trade Me later delisted. It was acquired by private equity firm Apax Partners for $2.56 billion in 2019.
In recent years, Trade Me has acquired myRent as well as a 13% share of consumer investment platform Sharesies and a 40% stake in Real Flow Finance.
Trade Me’s own future has been subject to speculation in recent years, with suggestions Apax is eyeing either a private equity sale or a public listing to exit.
There was speculation last year, too, of a potential sale to Rupert Murdoch interests, with The Post reporting the Murdoch-controlled Australian property listings firm REA Group had been in New Zealand for what might be a “serious sniff” of Trade Me.
Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
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