O'Reilly's APN judged no match for giant Fairfax

By Nick Stride

Friday 2nd November 2001

The merger of Wilson & Horton with Australia's APN News & Media won't create a group big enough to take on John Fairfax Holdings, analysts said yesterday.

Sir Anthony O'Reilly's debt-laden Independent News & Media this week announced a reshuffle in its empire under which 40% owned APN will buy all of New Zealand printer and publisher Wilson & Horton for $A809 million ($1 billion).

INM said the buy would leave it "well-positioned for future growth."

Speculation has abounded that Sir Anthony has his sights set on Fairfax and its "Rivers of Gold" newspaper publishing empire.

But the combined APN/Wilson & Horton would have a market capitalisation of $A1.5 billion, less than half Fairfax's $A3.1 billion, and would be heavily indebted, analysts said.

Fairfax is moving to strengthen its balance sheet. It announced on October 23 that it was ccmpleting preparation for a proposed convertible preference share issue "to further strengthen its balance sheet and increase the range of opportunities available to it."

Sir Anthony and Fairfax's chief executive Fred Hilmer held talks in August but Mr Hilmer said they ended "with no concrete proposals on the table."

Fairfax has defended itself against the predatory intentions of Australia's media barons for many years.

The latest to be seen off was Kerry Packer, who recently sold a 15% stake.

Canada's Conrad Black amassed a 25% stake, the maximum a foreign entity is allowed under Australian media ownership laws, but sold after failing to get those laws relaxed.

Speculation on Sir Anthony's intentions has centred on the Australian citizenship of two of his sons, and the fact that INM's APN stake is held in an Australian-registered trust. Commentators say the most Sir Anthony can do for now is to secure a stake in APN, keep his powder dry and lobby for a law change.

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