Antony Catalano’s last-minute bid to scupper the Nine-Fairfax merger has failed, with 81% of Fairfax shareholders this morning voting in favour of the $2.8 billion takeover.
Catalano, former Domain CEO and a shareholder in both Domain and Fairfax, tried to frustrate the deal late Sunday night, when he sent Fairfax chairman Nick Falloon a letter with a new offer, asking for a delay on the vote. Catalano said he could do a better deal for the company than Nine. But Falloon this morning said that Catalano’s offer was not superior to the Nine deal, and the board unanimously decided to go ahead with the vote.
Catalano suddenly quit Domain only four months after it was spun off from Fairfax, a company he’s had a tumultuous relationship with in the past. In its statement to the Australian stock exchange, Fairfax said Catalano’s offer contained:
No actual proposal that could be considered by Fairfax shareholders as an alternative to the proposed scheme of arrangement with Nine Entertainment Co Holdings Limited …
The letter from Mr Catalano does not constitute a Superior Proposal under the terms of the Scheme Implementation Agreement between Fairfax and Nine, and therefore the Fairfax board is unable to consider it in any event. The Fairfax Board believes that the value and strategic opportunities offered by the Scheme reflect a compelling proposition for Fairfax shareholders.
Catalano had offered to acquire 19.9% of Fairfax at above market prices, and pursue a “multi-pronged strategy” to generate more value for the publisher’s shareholders by selling non-core assets, building the Domain franchises and pursuing other asset sales. According to Fairfax’s report, Catalano holds roughly 1% of both Fairfax and Domain and would not have been able to block the deal without a late groundswell of support from other shareholders.
He was supported in his bid by Fairfax shareholder Thorney Investments run by Alex Waislitz. a wealthy Melbourne fund manager and investor. But 19.9% of Fairfax would cost more than $260 million and there was no sign of any financial support for Catalano, except from the likes of Thorney Investments and unnamed “private equity”.
The merger will go the Australian Federal Court in a week to be approved, where Catalano could potentially challenge the deal. If the court approves the deal as expected, Fairfax shares will stop being traded on November 28, and shares in the merged company will start trading on a when-issued basis on November 29 with full trading in the new company starting on December 10.
The value of Fairfax shares has fallen from 93 cents on the date of the announcement on July 26 (as imputed by the Fairfax offer terms of .3627 of a Nine share and 2.5 cents a share cash), to 61.5 cents this morning.