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It may have taken six months longer than planned, but Nine Entertainment (ASX: NEC) has finally offloaded leading New Zealand publishing business Stuff in a deal that will incur a cost of $40-45 million for the Australian media giant.
Just two weeks after terminating discussions with long-time bidder NZME (NZX: NZM, ASX: NZM), Nine announced today it has entered a share sale agreement in the form of a buyout by current Stuff CEO Sinead Boucher (pictured).
Nine will receive proceeds of NZ$1 from the sale, although it will keep ownership of the Petone print plant site in Wellington which will be leased back to Stuff.
The Australian group will also receive 25 per cent of the proceeds from Stuff's sale of broadband provider Stuff Fibre, plus up to a further 75 per cent over three years depending depending on the Stuff business' ability to raise funding.
The sale is expected to be completed by 31 May.
"We have always said that we believe that it was important for Stuff to have local ownership and it is our firm view that this is the best outcome for competition and consumers in New Zealand," says Nine CEO Hugh Marks.
Boucher says the transaction gives the business far greater certainty as the media industry navigates through the challenging waters of the post COVID-19 ad market.
"Today is an important moment for Stuff as a business," she says.
"It is great to take control of our own future with the move to local ownership and the opportunity to build further on the trust of New Zealanders, who turn to us for local and national news and entertainment every day.
"We are looking forward to working closely with staff, customers and our audiences as we embark upon what we believe will be a great new era for the business and the independent journalism it is built on."
The planned sale was one of the first points of call when Nine merged with Fairfax in December 2018, along with plans to sell its events business and Australian Community Media (ACM), the latter purchased within a short timeframe by Antony Catalano for $115 million.
Leading into the merger Fairfax-owned ACM and Stuff had been struggling with the new media environment, accounting for the lion's share of $188.7 million in impairment charges in FY18 (of which $105.3 million came from the New Zealand business).
Nine announced to the market that it planned to have the sale of Stuff completed within a year from the date of the initial acquisition through the Fairfax merger.
In FY19 Stuff recorded an EBITDA of $28 million, compared to underlying EBITDA of $52 million in FY18.
By the first half of FY20 its net profit after tax (NPAT) was down at $8 million before specific items.
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