A request issued to the ASX revealed that “in accordance with Listing Rule 17.1, Fairfax Media Limited [ASX: FXJ] requests that its securities be placed into an immediate trading halt pending an announcement in relation to the Domain Group.”
Re-interpreted, it seems that Fairfax Media plans to ‘spin off’ Domain as a separately listed entity on the Australian Securities Exchange with the publishing company entering into a trading halt.
According to The Australian Financial Review, Fairfax declined to comment but sources said there was a view among key Fairfax decision makers that “the time was right” to enact the long-speculated spin off plans. Media industry consolidation is firmly on the radar for 2017 regardless of whether there is a change in ownership laws.
Fairfax is understood to be targeting a deal for Domain before the end of the year.
The AFR said analysts expect Domain to be worth about $2 billion as a separately listed entity, having grown to earn about $130 million a year for the publishing company.
Fairfax could report $139 million in earnings before interest, tax, depreciation and amortisation for the six-months to December 31, with Domain accounting for almost half or $65 million.
Fairfax chief executive Greg Hywood will reportedly front the market with his company’s half-year numbers this week.
The AFR suggested that Fairfax would retain between 60-70 per cent ownership of the separate company and Domain’s current chief executive Antony Catalano would continue to run the company.
According to the ABC, reports suggest a separation could be completed by the end of the calendar year, with the standalone real estate firm valued around as much, or more, than its parent’s total market capitalisation of $2 billion.
Fairfax has asked for a trading halt until Thursday, or when it makes an announcement to the market, whichever occurs first.
With the company due to report its first-half profits tomorrow morning, it is widely expected the announcement about Domain’s future will be made then.