Anthony 'The Cat' Catalano is trying to derail the Fairfax-Nine merger at the last minute

Peter Parks/AFP/Getty Images The Fairfax Media offices in Sydney.

  • Former Domain CEO Anthony Catalano is seeking a delay in a vote by Fairfax shareholders, scheduled for today, on the media company’s proposed merger with Nine Entertainment.
  • The merged entity would create a $4 billion company that would reach half of the Australian population each day. Catalano says share price moves since the merger plan was announced mean it is a “terrible deal” and says he can unlock more value from Domain.
  • It’s unclear if he has sufficient interest or support from other shareholders.
  • The premium attached to Fairfax shares under the original terms has been negated by share price moves.

Former Domain chief executive Anthony Catalano is trying to put the merger between Fairfax Media and Nine Entertainment on ice with a last-minute intervention appealing for an alternative path for Fairfax which he argues will unlock more value for its shareholders.

Those shareholders are due to vote today on the merger proposal, which would create Australia’s largest media company, worth around $4 billion.

Catalano wrote to chairman Nick Falloon and shareholders last night calling for the vote to be delayed. He is offering to buy 19.9 per cent of Fairfax at a small premium to Friday’s closing price of 62 cents.

Catalano told The Sydney Morning Herald that his intervention “wasn’t deliberately planned as an 11th-hour attack” but that at Fairfax’s current share price of 62c it was a “terrible deal”.

“I wanted to explain this wasn’t deliberately planned as an 11th-hour attack … I hope no one sees this as anything other than genuine, I’ve had 26 years of involvement with Fairfax,” he told John McDuling at the SMH.

It is unclear if Catalano, known as “The Cat”, has sufficient interest or support from Fairfax shareholders to prevent the deal being approved today. It requires approval of 50 per cent of shareholders.

When the deal was initially announced in July, the offer of 0.3627 Nine shares plus 2.5c cash to Fairfax shareholders implied a 22 per cent premium on Fairfax shares.

The share price of both companies has declined significantly since the deal was announced, with the broad-based market sell-off of recent weeks contributing to the falls. Nine closed last week at $1.63, meaning the offer to Fairfax shareholders is now worth approximately 61.6 cents per share — almost exactly Friday’s closing price.

Catalano’s argument is there is an insufficient premium for control of Domain, the separately-listed real estate listings business he used to run.

“As the former CEO of Domain, I have a unique knowledge of that business, and accordingly believe that I could provide significant assistance in optimising its value for Fairfax shareholders, along with providing a strategy for the balance of Fairfax’s valuable assets,” Catalano wrote.

“Whilst the late notice of my proposal is regrettable, it has been prepared in response to the material decline in the market value attributed to The Scheme and accordingly I have worked as expeditiously as practical in the circumstances.”

The merged entity, which is being unanimously supported by the Fairfax board, would reach half of the Australian population each day across print, online, and radio. It would comprise Nine’s free-to-air television network, include Nine’s free-to-air television network, a portfolio of digital businesses, including Domain, Stan and 9Now, as well as Fairfax’s mastheads such as the Sydney Morning Herald and The Age and radio interests through Macquarie Media.

The competition watchdog approved the deal earlier this month.

There’s more at The Sydney Morning Herald >>

Business Insider is published in Australia by Allure Media, a wholly-owned subsidiary of Fairfax Media.

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