Media firm NZME set out to hurt Stuff as buyout bid turned sour - lawyer

Friday, 15 May 2020

Jack Hodder QC, right, counsel for NZME, arriving at Auckland's High Court last week

Media company NZME set out to harm its rival Stuff when it made a controversial announcement to the markets about its bid to buy its major competitor, a court has heard.

NZME took its bid to buy Stuff to the High Court at Auckland where it sought an emergency interim injunction to force Stuff's Australian owner, Nine Entertainment, back to the negotiating table.

Nine turned its back on NZME negations because of the inevitable political and regulatory battle that would need to be fought if the merger was to go ahead.

NZME argues Nine has breached an exclusive agreement to explore the possibility of buying Stuff. Stuff argues there has since been a radical change in circumstances.

* Opinion: StuffMe becomes RebuffMe amid merger chaos

* NZX Regulation contacted NZME over Stuff takeover statement

The hearing was heard in front of Justice Sarah Katz, with Jack Hodder QC representing NZME and John Dixon QC as counsel for Nine Entertainment.

Dixon told the High Court NZME's decision to tell the NZX on Monday that it planned to buy Stuff for $1 was 'utterly unnecessary'.

'There is no purpose to that announcement and no need for it under market rules. It is simply designed to hurt its competitor.'

The announcement resulted in an approach to the publisher from NZX Regulation, after Nine said the talks were off.

The commercial arrangements of the deal and affidavit evidence from both sides have been suppressed by the court, so much of the detail discussed at the hearing cannot be reported.

NZME, whose stable includes the New Zealand Herald and Newstalk ZB, said in a statement on Monday that it was still in 'a binding exclusive negotiation period' with Nine for the purchase of Stuff.

The company argues it still has exclusive rights to bid for Stuff and is asking a judge to allow the talks to continue.

But Dixon said Nine called off the negotiations after a drastic change in circumstances.

That included barring NZME from having access to its accounts and other data.

'Really what they want is to get inside a business that they can't acquire,' Dixon said.

Following its announcement that it would by Stuff for $1, NZME issued a further announcement to the exchange, noting Nine's position but also stating that as far as NZME was concerned it was still negotiating to buy Stuff.

At the same time as it reiterated its buying intentions for Stuff, NZME put in a fresh request to the Commerce Commission to allow it to buy Stuff.

A spokesperson said an application had been received but further information was required.

''We are unable to give an estimate of how long this application will take to process at this stage.''

Meanwhile, NZME's shareholders are being urged to vote for a break up of the company's assets.

Three resolutions have been put by individual shareholders to the company's annual meeting in June. The NZME board has recommended shareholders reject them.

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

Justice Katz reserved her decision on the matter but said she hoped to issue it on Monday.

This story was amended, removing an earlier reference to negotiations having been stopped, in part, due to the offer price.