Fairfax Media Group will face another raid by activist shareholder and iron ore magnate Gina Rinehart after she enlisted Macquarie Radio Network’s John Singleton in her bid to exert control over the publisher of the Dominion Post, Sydney Morning Herald and Australian Financial Review.
Rinehart’s Hancock Prospecting and Singleton’s Gutenberg Investments have pooled their Fairfax shareholding to hold 15.4 percent voting power, according to a statement lodged with the ASX. The agreement aims to enhance shareholder value in Fairfax and will see the parties consult on key matters affecting the stock, the document said.
The end-goal emerges in the terms for automatic termination, which include whether the parties, either together or alone, “come into a position to exercise control of FXJ (Fairfax) or the commercial radio broadcasting licences controlled by FXJ for the purposes of the BSA (Broadcasting Services Act).”
The deal is Rinehart’s second attempt to gain greater control after she built up a 19 percent stake earlier this year and missed out on obtaining a seat at the media group’s board despite being the biggest shareholder. Singleton’s Macquarie Radio Network unsuccessfully tried to buy Fairfax’s stations in 2011.
Fairfax has a market capitalisation of A$1.12 billion on the ASX, almost half the A$2.21 billion enterprise value put on it, and some analysts speculate Rinehart and her supporters will pursue asset sales if they gain control.
This month, Fairfax sold its remaining stake in online auction site Trade Me for A$616 million cash which it used to pay down debt and buy technology investment firm Netus.
The media group took a A$2.8 billion impairment on its goodwill and mastheads in the 2012 financial year as it reassessed the value of its traditional media assets and attempts to reform itself into a nimble, digital-based company.
Fairfax shares jumped 4.2 percent to 49.5 Australian cents on the ASX, having shed 34 percent this year. The stock is rated an average ‘hold’ based on 13 analyst recommendations compiled by Reuters, with a median target price of 50 Australian cents.