What's New December 21, 2014

Macquarie and Fairfax merger confirmed

The Macquarie Radio Network and the Fairfax Radio Network have announced that they have agreed terms to merge.

The merger will see Fairfax holding 54.5% in the listed MRN entity, and receiving $18m in cash from Macqurie. Macquarie Radio shareholders will hold 45.5% of the merged company.

The merged entity will remain listed on the ASX as a pure, albeit far larger, radio company.

96FM Perth is not part of the merged company, having been sold to ARN (see here) and the cash from the Perth sale, combined with the cash consideration as part of the merger, means Fairfax will receive $96m as part of the deal, and have a majority shareholding in the new entity.

From a structural perspective, Fairfax and Macquarie have entered an MIA; a merger implementation agreement, this is shown below in full.

The transaction is subject to shareholder approval and will complete in March 2015. Stations included under the new entity will be; 2GB and 2UE Sydney; 3AW and Magic Melbourne; 4BC and Magic Brisbane; and 6PR in Perth.

96FM has been divested, and the merged company will now proceed to divest 2CH in Sydney and the regional Queensland stations.

Fairfax CEO Greg Hywood said:

“This is a compelling transaction for both Fairfax and MRN. The merger creates a genuine national Talk radio network that was not previously available to advertisers. The merger provides both cost and revenue synergies from enhanced network and sales opportunities that will create a more efficient and effective network for News, Talk and Sports radio along with music stations.

“The merger brings together the greatest mix of talkback talent ever assembled in a single radio network. Leading presenters engage listeners with an unprecedented quality and diversity of commentary, entertainment and sport coverage"

The Board of the combined entity will consist of five Directors, including MRN’s Executive Chairman and Chief Executive Officer Russell Tate as Executive Chairman, two Fairfax nominees, one further MRN nominee, and one Independent Director.

The combined entity will be led by Mr Tate as Executive Chairman for an interim 12- month period, with Fairfax Managing Director Adam Lang appointed Chief Operating Officer.

The terms of the agreement are shown below: