Fairfax Media and Nine Entertainment have announced plans to merge by the end of 2018 to create Australia's largest integrated media player.
The combined company, to be led by Nine chief executive Hugh Marks, will include Nine's free-to-air television network, Fairfax's mastheads including The Sydney Morning Herald and The Age, a suite of digital assets including property listings portal Domain, subscription video platform Stan and 9Now, and Fairfax's radio interests through Macquarie Media.
Under the proposal, Fairfax shareholders will receive 0.3627 Nine shares and $0.025 cash for each Fairfax share, implying a 21 per cent premium to Fairfax's closing price on Wednesday. Once the deal is completed, Nine shareholders will hold 51.1 per cent of the combined company, with Fairfax shareholders owning the remaining 48.9 per cent.
Fairfax directors will recommend shareholders vote in favour of the scheme in the absence of a superior proposal.
“The proposed transaction for Fairfax reflects the success of Fairfax’s transformation strategy, which has created value for shareholders through targeted investment in high growth businesses, such as Domain and Stan, and prudent management of our media assets," Fairfax chief executive Greg Hywood said.
"The combination with Nine provides an exciting opportunity to continue to drive incremental value well into the future.”
Mr Marks said in a statement the merger would "add another dimension, creating a unique, all-platform, media business that will reach more than half of Australia each day through television, online, print and radio".
"For our audiences and employees, this means we will continue to be able to invest in premium local content across news, sport, entertainment and lifestyle," he said, noting agency partners and advertisers would be given access to a bigger marketing platform.
"For our shareholders, the merged business will generate an increasing percentage of its earnings from high growth digital businesses that provide a compelling opportunity to generate both incremental value and cash flow into the future."
Nine chairman Peter Costello said in a statement that both Nine and Fairfax had played "an important role in shaping the Australian media landscape over many years".
"The combination of our businesses and our people best positions us to deliver new opportunities and innovations for our shareholders, staff and all Australians in the years ahead," Mr Costello said.
Fairfax chairman Nick Falloon said the deal represented "compelling value" for shareholders, allowing them to "maintain their exposure to Fairfax's growing businesses whilst also participating in the combination benefits with Nine".
Three Fairfax directors will join the board of the new company, to be chaired by Mr Costello, with another two current directors from Nine.
Fairfax Media, which publishes the Illawarra Mercury, The Sydney Morning Herald and The Age, is the owner of this website.
More to come