NZX Regulation contacted NZME over Stuff takeover statement

Monday, 11 May 2020

Stuff said it had already terminated engagement with NZME before NZME announced to the NZX it was seeking regulatory approval for a takeover.

The NZX says its regulatory branch has been in touch with NZME, after the media firm issued a statement on Monday morning saying that it aimed to buy rival publisher Stuff for one dollar by the end of May.

Stuff's Australian owner Nine quickly issued a brief statement to the ASX in response, saying it had terminated discussions over a possible takeover by NZME of Stuff.

A Nine spokeswoman said the talks were terminated last week and that no talks were now taking place between the companies.

But NZME shares nevertheless rose 17 per cent to 25 cents on Monday morning in the wake of NZME's announcement.

NZME spokesman Cliff Joiner declined to comment on whether NZME was concerned its announcement to the NZX might have misled investors.

* Media company NZME cuts workforce by 15%

Stuff chief executive Sinead Boucher said she was unsure why NZME had said it was negotiating to buy Stuff, when Stuff's owner had given a 'clear message' there would be 'no transaction'.

In a second announcement to the NZX, which NZME issued on Monday afternoon, the company acknowledged Nine's statement that the talks had ended.

But it indicated that as far as it was concerned it was still in a 'binding exclusive negotiation period' to buy Stuff, despite Nine's statement that the talks had been terminated

NZX spokesman David Glendining said NZX Regulation had been in contact with NZME on Monday morning.

NZX Regulation 'notes, in particular, the subsequent statement released by NZME at 12.11pm in respect of the status of negotiations between those parties', he said.

Comment has been sought from the NZX, and NZME, over whether NZX Regulation had requested NZME put out that second statement.

The NZX has also been contacted for comment on whether it is considering any separate interventions.

NZME, owner of the New Zealand Herald and Newstalk ZB, said in its initial statement to the NZX that it was seeking urgent legislation to allow it to buy rival publisher Stuff for $1 by the end of May.

That statement said NZME and Nine had agreed an exclusive negotiation period on April 23.

It also said that NZME had applied to the Commerce Commission for clearance for a takeover.

But it made no reference to talks between the companies having been terminated.

Nine spokesman Victoria Buchan said it be would be a 'fair call' to say she was surprised by the first statement NZME had released.

Stuff chief executive Sinead Boucher also said NZME's NZX announcement had been 'very surprising to both Nine and ourselves'.

'We are really not sure why NZME took this step, given the clear message from our owners that there would be no transaction,' she said.

NZME's second statement to the NZX appeared to question Nine's right to turn its back on NZME's approaches.

NZME says the media sector is 'too small' for the current number of quality participants and the need for consolidation is urgent.

'NZME notes Nine’s announcement that it has terminated further engagement with NZME in relation to any acquisition of Stuff,' it said.

'NZME’s view is that it is still in a binding exclusive negotiation period with Nine and does not accept that exclusivity has been validly terminated.'

The events unfolded as the coronavirus crisis piles more pressure on media businesses which have struggled to replace advertising revenues lost as a result of the growth of the internet.

The Government is expected to announce additional support for the sector in the Budget on Thursday after last month releasing a $50 million assistance package that appeared most directly towards broadcasters such as television Three owner MediaWorks and Prime owner Sky Television.

TVNZ is expected to benefit to the tune of $6m from the existing package.

NZME said in its morning statement that it believed the New Zealand media sector was too small for the 'current number of quality participants'.

Consolidation was 'urgent' in the face of dramatically declining advertising revenue and current general economic conditions, it said.

'NZME continues to believe that it is the best owner for Stuff as it is best placed to preserve mastheads, newsrooms and jobs,' it said.

NZME, which made 200 of its 1400 staff redundant last month, is valued at $49m on the NZX.

Stuff-owner Nine is valued at just over A$2.4b (NZ$2.6b) on the ASX.

Both companies have requested staff take a 15 per cent pay cut as a result of the downturn in advertising caused by the coronavirus pandemic.

“We continue to have discussions with a range of interested parties on the sale of Stuff,' a Nine spokesman said.

'We confirm that we have not advised the New Zealand government on a deadline of May 31 to close the business,” he added, in response to a media report speculating that it had given the Government such a deadline.

Broadcasting Minister Kris Faafoi was not commenting at this stage on NZME's request, a spokesperson said.

'I can confirm the minister has received a letter from NZME laying out its plans to apply to the Commerce Commission to purchase Stuff and asking for Government assistance to allow that to happen.'

A commission spokeswoman said it had received a takeover application, which it had not yet registered, and would not comment on whether it was filed by NZME only, or by NZME in conjunction with Stuff or Nine.