The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price has risen on news of another media acquisition.
Nine is one of Australia’s most well-known media companies, and with their merger with Fairfax Media in December 2018 they also became Australia’s largest locally owned media company. Some of their assets include the Nine Network, The Sydney Morning Herald, The Age, Australian Financial Review, CarAdvice and Stan.
Nine’s Newest Planned Acquisition
Not long after Nine acquired Fairfax, Nine is now in prime position to acquire all of the shares of Macquarie Media Ltd (ASX: MRN) in an all cash, off market takeover offer.
The offer price is for $1.46 per Macquarie Media share, which equates to an enterprise value of $275.4 million including Macquarie Media’s net debt of $22 million at 30 June 2019 and payment of its August 2019 dividend of 2 cents per share.
Nine already owned 54.5% of Macquarie Media, so it’s proposing to acquire the 45.5% of shares that it doesn’t own.
Macquarie Media established an independent Board committee to evaluate the proposed transaction and has unanimously recommended that Macquarie Media shareholders accept the offer in absence of a better offer.
Nine announced that the acquisition will be financed by cash reserves and existing debt facilities.
If the acquisition goes ahead Nine will be gaining control of 2GB, 3AW, 4BC, 6PR, Macquarie Sports Radio and will have presenters like Ray Hadley & Alan Jones.
Nine CEO Hugh Marks said:
“The acquisition of Macquarie Media consolidates Nine’s position as a supplier of News and Current Affairs content across all our key platforms – Television, Digital, Print and now radio. Together, we are investing more than $400 million per year providing premium News and editorial content, entrenching Nine as the go to place for all news needs, for all Australians.
“In addition to cost efficiency initiatives already underway at MRN, bringing the two businesses together will realise further annualised synergies of more than $10 million.”
Is Nine A Buy?
If it goes ahead then Nine will have media offerings across all types of channels. TV faces challenges but other aspects of Nine’s business could be sources of growth, so it’s probably more attractive than it was before. But, it’s not the type of business I would add into my portfolio.
I prefer businesses with more obvious paths to growth, such as the ones revealed for free in the report below.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.