Credit: Joseph Barrientos via Unsplash
Billionaire Bruce Gordon, the owner of the WIN regional television network, is reportedly looking at ways to control Nine Entertainment, the media group in which he is already the largest shareholder.
The Australian reported “multiple sources” saying Gordon was mulling whether to make a takeover bid for Nine or to increase his stake by the 3% allowed every six months, once the sale of online property classifieds business Domain has been completed and Nine’s valuation drops.
In a notice to the ASX in May, Gordon's private investment company Birketu said recent transactions increased WIN’s aggregate economic interest in Nine to 25.22% from 25.10% and the voting interest to 19.98% (316,837,365 shares) from 14.95%.
This puts ownership just under 20%, above which under ASX rules a company or person must make a takeover bid.
The sale of Nine’s stake in Domain is likely to cut Nine’s share price, making it an easier takeover target.
Analysts see the market valuing Nine, ex-Domain, at $1.05 a share. The shares last traded a $1.71.
The media group’s pay day, from its 60% holding, is expected to be A$1.4 billion in cash proceeds, net of capital gains tax.
This will put Nine in a net cash position. The company intends to distribute a portion of that to shareholders via a fully franked special dividend of between 47 and 49 cents a share.
The deal with US-based property group CoStar for A$4.43 a share is expected to be completed in the September quarter.
Nine posted a slide in profit in a challenging advertising market with revenue up just 1% in the six months to December. Revenue was $1.39 billion for the half year, while net profit after tax fell 25% to $112.2 million.
However, the company in May reported total TV advertising revenue increased by almost 8% in the March quarter. The outlook for the rest of the year is clouded by the current economic and market uncertainty.
Nine argues that, despite losing the classifieds in return for a pile of cash, it will continue to be Australia’s “largest locally owned media” company with a unique portfolio of assets across streaming and broadcast television, radio, publishing, digital and data.
And the company has raised the possibility of using some of the funds for “investment opportunities” both internally and externally.
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