Fairfax flags digital acquisition strategy after sell-down of Trade Me
Fairfax Media has flagged its intention to make digital acquisitions as part of a wider strategy to transform the business from print to digital, despite offloading its 51% stake in Trade Me.
Speaking to The Australian Financial Review, Fairfax Media chief executive Greg Hywood outlined aspects of the company’s digital strategy, including small-scale digital acquisitions.
However, Hywood said “no one should be expecting any huge purchases”, suggesting any acquisitions are likely to be start-ups.
Fairfax is in talks with former Microsoft executive Daniel Petre and Alison Deans, who used to run eBay Australia and New Zealand, to advise on new opportunities.
The AFR said Fairfax intends to acquire Petre and Deans’ technology investment business, netus, for an amount “in the tens of millions of dollars”.
In the past, Fairfax has said it is keen on transaction site acquisitions, viewing them as the replacement for its old media classifieds strategy.
However, the company announced yesterday it has executed an underwriting agreement for the sale of 202 million Trade Me shares for gross proceeds of $616 million.
Fairfax acquired Trade Me – a New Zealand-founded auction and classifieds website – for $NZ750 million in 2006.
According to Fairfax, the shares are being sold at a price of $3.05 per share. Following completion of the sale, Fairfax will no longer hold any shares in Trade Me.
According to Hywood, Trade Me has been a great business for Fairfax.
“We have learned a great deal more about the successful operation of digital businesses over the years since we acquired Trade Me,” Hywood said in a statement.
“The proceeds from the sale will reduce Fairfax’s net debt and will provide us with a very strong balance sheet and the financial flexibility to invest and to complete the company’s structural transformation.
“Our decision, at this time, to sell our remaining shareholding in Trade Me in no way reflects on our view of Trade Me’s future.
“Trade Me’s strong performance has given rise to an opportunity now to reduce debt and provide greater financial flexibility. We have every confidence in Trade Me’s ongoing strength.”
Hywood also defended the move in his interview with the AFR, stating “just because you move out of one digital business doesn’t mean the strategy is not intact”.
“Since when are you supposed to hold assets forever? There are some assets you will trade,” he said.
Other assets the company could sell include digital businesses Domain, RSVP and Stayz.
Fairfax Media was contacted by StartupSmart, but declined to comment.