In the latest deal triggered by the federal government’s changes to the media laws, Fairfax Media this morning announced it plans to take over Rural Press in a friendly deal which values RUP at some $2.3 billion.

Although it is yet another deal that didn’t need the media law changes — like those of Seven and PBL spinning out their media assets — it adds to the list of deals done since the laws were passed in October.

The companies say the merger “will create Australasia’s largest integrated metropolitan, regional and rural print and digital media business” — and will make sure the raiders lurking on its share register in the shape of News Corp (7.5%) and Seven Network (3%) will have to pay out a lot more money to snare the group or break it up.

The companies said the deal, if completed, will create a company with a value of $9 billion, including debt. Based on market values for Fairfax yesterday of more than $5.3 billion and the new valuation for Rural Press of $2.3 billion, the market cap of the merged company will be around $7.7 billion.

Rural Press is 53% owned by the family led by John B. Fairfax. The deal was announced to the ASX this morning in a joint announcement by the two companies.

The terms of the deal are: each Rural Press Ordinary and Preferred shareholder will be entitled to receive for each share held: – 2 Fairfax Media shares and $3.30 in cash; or – 2.3 Fairfax Media shares and $1.80 in cash.

That puts a value of between $13.78 and $14.35 on each ordinary share based on yesterday’s closing price for Fairfax of $5.21. The preference shares will be valued at $13.84 to $14.41.

Fairfax says that if the two share option is taken, 405 million shares will be issued to holders of RUP ordinary and preference shares. It could see the John B Fairfax stake in the combined company total up to 15%.

The deal would also restore The Canberra Times to Fairfax ownership: it has been owned by Packer, Murdoch and Stokes. And it will give Rural Press’s hard-nosed CEO Brian McCarthy a crack at running the newspaper titles of the Fairfax empire.

“Post the merger, Mr Brian McCarthy, the current CEO of Rural Press, will become Deputy CEO of Fairfax Media and CEO, Australia, responsible for metropolitan, regional, rural and magazine publishing and printing in Australia. Fairfax Business Media, Fairfax Media in New Zealand, Fairfax Digital, and Trade Me continue to report to Fairfax Media CEO David Kirk,” say the companies.

McCarthy’s success in cutting costs and running lean journalism should be great for shareholders — and a real worry for anyone who cares about editorial values.