Monday 27th June 2016
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NZME shares debuted on the NZX at 85 cents, the bid price, after holders dropped their ask price from $1.05 to meet a market questioning the valuation of the New Zealand print media and radio assets spun off from APN News & Media.
The first trade was at 1pm, an hour after the listing opened. The stock last traded at 86 cents, valuing the company at $168.6 million, compared with a listing price of $1.
The spun off NZME is a pure-play New Zealand media company, with assets including the flagship New Zealand Herald newspaper, a portfolio of radio stations including Newstalk ZB and the GrabOne daily deals site.
APN's shareholders overwhelmingly backed plans to split off the New Zealand unit as a standalone listed company via a distribution of shares to existing investors. The move frees up APN to focus on Australian radio and outside advertising business, while NZME can pursue its merger with rival Fairfax New Zealand. The split stoked speculation some Australian institutional investors may not have wanted exposure to a business across the Tasman.
"There are pros and cons. A traditional media business is more likely to trade on lower multiples," said Shane Solly, a director at Harbour Asset Management. "Others are saying this is a great exposure to the New Zealand economy."
NZME chief executive Michael Boggs fronted investors briefings in Sydney and Melbourne and local institutions have also been given presentations. But major New Zealand brokerages including Craigs Investment Partners said they hadn't been briefed. Less than 1 percent of NZME shares are currently held by New Zealanders, meaning there was "a huge opportunity" for local investors to get involved, Boggs told the NZ Herald newspaper.
The listing comes in the wake of the Brexit vote, which slashed trillions of dollars off the value of global markets, although the New Zealand market was relatively unscathed. The S&P/NZX 50 Index was recently down 0.6 percent having fallen 2.3 percent on Friday.
Harbour Asset's Solly said investors were also having to consider that there is "a lot of change occurring in the media industry at the moment and it is a difficult time for the business to be coming to market."
"Does NZME become a trans-Tasman orphan in the near-term? Maybe it does," he said.
APN's shares, which have been through a one-for-seven, consolidation fell 3.1 percent to A$4.32 on the ASX while the Australian shares of NZME haven't yet traded. Trading today is on a deferred settlement basis. Trading will begin on a normal settlement basis on July 1 following the implementation date of the demerger of June 29."
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