Fairfax Media is selling its stake in New Zealand online auction house Trade Me in a $600 million deal aimed at paying down debt, according to reports.
Investment bank UBS is placing the 51 per cent stake in Trade Me – New Zealand’s dominant classifieds business – to institutions at around $3.05 a share, the Australian Financial Review said today.
This would represent a 17 per cent discount to Trade Me’s Australian closing price on Friday.
Fairfax shares rallied last week ahead of the stake sale, starting at 45 cents on Monday and rising to 54 cents before easing to finish the week at 51 cents.
Trade Me has proved to be a good investment for Fairfax – the company was floated in New Zealand and Australia in November 2011 at $2.07 a share. Fairfax paid $NZ700 million for Trade Me in 2006.
It is believed the opportunity to capitalise on Trade Me’s strong market performance is one of the main reasons for the sale, the AFR said. Senior Fairfax executives believe the business is relatively mature in its home market, where it sells cars, jobs, real estate and general goods online.
The board of Fairfax, publisher of this website, is also keen to “de-risk” the newspaper, digital, and radio group’s balance sheet at a time when the Trans-Tasman media company is changing its strategy to focus on online audiences.
The sale of Trade Me, however, reduces Fairfax’s exposure to a strong source of digital earnings during a dramatic slowdown in the traditional print advertising market.