A big day today for Fairfax Media (FXJ) which will confirm that it is heading down the demerger route by hiving off its Domain online property business.
A statement to the ASX Tuesday morning asked for Fairfax shares to be placed in a trading halt “pending an announcement in relation to the Domain Group.” The trading halt came ahead of today’s financial results for the six months to December 31.
The Domain spin off is expected to be revealed then, which will leave two companies instead of one.
Fairfax took write downs of $900 million or more in May 2016 to demerge Domain from the rest of the company and turn it into a stand alone business.
The Financial Review reports that Domain will be a separately listed company with Fairfax owning between 60-70% in the company, much the way that REA Group is 61% owned by News Corp and accounts for the majority of the Murdoch clan company’s market value.
Chief executive Greg Hywood is expected to release more details when he delivers half-year results.
Fairfax shares last traded at 87 cents, the lowest price since January 31 this year and down 2.3% so far this year.
Rumours surfaced in The Australian Financial Review Monday night that Fairfax is being advised by Macquarie Capital on how to separate Domain from the rest of the company.
Major shareholders have been asking management to sell Domain, which they believe could be worth billions. In 2015-16 Domain delivered around 42% of Fairfax’s pre tax earnings – $120 million out of $283 million.
