Shares in media company NZME gained after the company announced a strategic aquistion of start-up website BusinessDesk.
NZME, owner of the NZ Herald, said it has entered into a conditional agreement to acquire BusinessDesk for an initial cash payment of $3.5 million, followed by an earn-out amount of up to $1.5 million if agreed targets are met by December 31, 2023.
BusinessDesk is currently owned by Content Ltd, whose shareholders include founder Pattrick Smellie and investor Brian Gaynor as well as a number of staff.
NZME shares climbed 9c, or 6.82 per cent, to $1.41 following the announcement.
"NZME's acquisition of BusinessDesk will help supercharge their growth and realise the full potential of the opportunity to support New Zealand's business community," said NZME chief executive Michael Boggs.
"The BusinessDesk team should be proud of what they have created in a short period of time. NZME will be able to provide both BusinessDesk and NZ Herald Premium subscribers with incredibly comprehensive and trusted business news to its consumer and business customers."
Since launching a subscription-only business and economic news service in early 2020, BusinessDesk has experienced substantial growth and now has a base of 10,000 digital subscribers.
NZME currently has 135,500 digital and print-enabled subscribers while digital-only subscribers now total 78,500.
Smellie, editor and chief executive of BusinessDesk, said that the impact of Covid-19 revealed strong appetite for high-quality, trusted news and analysis aimed at business owners, investors, professional services providers and political and policy decision-makers.
"By combining with NZME's strong digital publishing experience, subscription growth expertise and international partnerships, along with the sales, marketing, and management strength that it can bring to bear, we are creating the potential to supercharge BusinessDesk's growth in ways that we could not otherwise achieve."
The sale remains conditional on: no material adverse change occurring; transfer of employees and contractors to operate the business; BusinessDesk shareholder approval; and satisfactory engagement with the Commerce Commission in relation to the transaction.
Should all these conditions be met, the transaction is expected to complete in the first part of next year.
NZME has confirmed that all current BusinessDesk employees will be offered roles with NZME, resulting in an anticipated total of 35 experienced business journalists across the BusinessDesk and New Zealand Herald Business teams.
The BusinessDesk brand will be retained as a premium subscription offering.
"Since launching NZ Herald Premium we've been extremely pleased by the value that the New Zealand business community has placed in accessing quality journalism," said Boggs.
"With BusinessDesk operating alongside and complementary to NZ Herald Business we'll be delivering an even better service to all our business readers across both platforms, and further delivering on our 2023 Strategic Goals, as recently shared at NZME's Investor Day."