Fairfax Media and Nine Entertainment shares rose yesterday after Fairfax shareholders ignored a last minute attempt to destabilise the $2.8 billion deal by former Fairfax property executive, Anthony Catalano.
Fairfax shareholders voted strongly in favour of the Nine offer in Sydney on Monday morning, rejecting Catalano’s Sunday night move to try and frustrate the deal. The vote was 81% in favour of the deal.
Fairfax shares rose 2.4% to 63 cents, Nine shares rose 1.8% to $1.64. At that price, the bid values Fairfax shares at 63 cents.
Fairfax Media’s board told Mr. Catalano to go away in a statement to the ASX before trading started Monday morning and ahead of the annual meeting of shareholders and separate meeting to vote on the scheme of arrangement takeover by Nine Entertainment.
Catalano’s last-minute letter intervention via a letter to the Fairfax board was seen as an opportunistic attempt to try and disrupt the deal, but without any backing.
Catalano, a former CEO of Domain, Fairfax’s real estate web listings business, wrote to the Fairfax board on Sunday complaining about the takeover deal, claiming he could do better if Fairfax rejected the Nine offer. News of his letter appeared in print media, starting with News Corp papers such as The Australian. The letter was also publicised in Fairfax media papers on Monday
In their statement to the ASX Fairfax said Catalano’s letter “contains no actual proposal that could be considered by Fairfax shareholders as an alternative to the proposed scheme of arrangement with Nine Entertainment Co Holdings Limited.”
“Accordingly the Fairfax board, which met this morning, will proceed with the Federal Court ordered shareholders’ meeting to consider the Scheme at 10.00am this morning, and continues to unanimously recommend that shareholders vote in favour of the Scheme.
“The letter from Mr. Catalano does not constitute a Superior Proposal under the terms of the Scheme Implementation Agreement between Fairfax and Nine, and therefore the Fairfax board is unable to consider it in any event. The Fairfax Board believes that the value and strategic opportunities offered by the Scheme reflect a compelling proposition for Fairfax Shareholders.”
Media reports said he was supported by Fairfax shareholder, Thorney Investments, run by Alex Waislitz, a wealthy Melbourne fund manager and investor, which has long supported Mr. Catalano. Buy 19.9% of Fairfax would cost more than $260 million and there was no sign of any financial support for Mr. Catalano, except for the likes of Thorney Investments and unnamed ‘private equity.’
The value of Fairfax shares had fallen from the 93 cents on the date of the announcement on July 26 (as imputed by the Fairfax offer terms of .3627 of a Nine share and 2.5 cents a share cash), to 61.5 cents this morning
Next for the merger deal is a Federal Court hearing to be held a week today (Tuesday) to approve the deal. Fairfax shares will stop being traded on November 28, shares in the merged company will start trading on a when-issued basis on November 29 and full trading in the new company will start on December 10.
Mr. Catalano is likely to continue his campaign against the deal and there have already been reports that he opposed the takeover in the Federal Court hearing next week.
