Fairfax puts Trade Me sale proceeds to work
Fairfax, which publishes the Herald, paid $NZ700 million for the Trade Me business in 2006.
The Fairfax Media chief executive, Greg Hywood, said on Tuesday that the sale's proceeds would "provide us with a very strong balance sheet and the financial flexibility to invest and complete the company's structural transformation".
The sale cuts Fairfax's net debt to below $200 million.
While the Trade Me sale was supported by some of Fairfax's major institutional shareholders, it also deprives the company of a key source of digital earnings.
The Netus acquisition - which is understood to be in the tens of millions of dollars - is designed to address this.
The founder of Netus, Daniel Petre, said the company would be charged with finding "investments that can benefit from the traffic Fairfax can point at new businesses".
He said Netus would be looking for opportunities that "have the potential to move the dial in a reasonably short period" which he identified as three years.
Earlier this week Mr Hywood said the company was looking for small-scale digital acquisitions.
Netus will also focus on helping Fairfax's present digital business achieve better results.
"We think there is some scope here as well," Mr Petre said.
Netus claims success with previous investments such as ReachLocal and Travel.com.
Mr Petre and Netus's chief executive, Alison Deans, both worked with the Kerry Packer-backed tech investment firm ecorp and helped develop eBay's local operations, which Ms Deans headed.
Mr Petre set up Netus in 2005 with a $40 million investment from Fairfax rival News Ltd.
News sold its half share of Netus in May this year for $22.3 million, saying it wanted to focus its resources on "larger opportunities".
Frequently Asked Questions about this Article…
Fairfax Media completed the sale of its stake in New Zealand online auction house Trade Me for $616 million. Fairfax had originally paid NZ$700 million for the business in 2006.
Fairfax's CEO Greg Hywood said the proceeds will provide a very strong balance sheet and financial flexibility to invest and complete the company's structural transformation. The sale also cuts Fairfax's net debt to below $200 million.
Yes. While the sale reduces debt, it also removes a key source of Fairfax's digital earnings. Fairfax has moved to address that gap by acquiring tech investment company Netus to rebuild digital earnings and pursue small-scale digital opportunities.
Netus is a tech investment company Fairfax bought for an undisclosed sum said to be in the tens of millions. Fairfax plans to use Netus to find and grow digital investments that can benefit from Fairfax's audience and improve its existing digital businesses.
Netus was founded by Daniel Petre and its chief executive is Alison Deans. Both have worked with the Kerry Packer-backed tech investment firm ecorp and helped develop eBay's local operations. Netus also claims past successes with investments such as ReachLocal and Travel.com.
Netus will be charged with finding investments that can benefit from Fairfax’s traffic and improve results for its digital business. Daniel Petre said Netus will look for opportunities that have the potential to 'move the dial' within a reasonably short period, which he identified as about three years.
Daniel Petre set up Netus in 2005 with a $40 million investment from News Ltd. News later sold its half share in Netus in May of this year for $22.3 million, saying it wanted to focus on larger opportunities.
For shareholders, the sale strengthens Fairfax's balance sheet and lowers net debt, giving the company flexibility to invest and transform. However, it also removes a reliable source of digital earnings — a gap Fairfax aims to fill through the Netus acquisition and targeted small-scale digital deals.
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