Singleton alliance with Rinehart puts Fairfax 'in play'

FAIRFAX MEDIA'S shares surged over 7 per cent on Monday after the release of John Singleton and Mark Carnegie's "consultation agreement" with mining magnate Gina Rinehart, aimed at breaking up the company.

The agreement was signed on Friday between Messrs Singleton and Carnegie's Gutenberg Investments Unit Trust and Ms Rinehart's Hanrine Investments and Timeview Enterprises - part of the Hancock Prospecting Group, which owns 14.99 per cent of Fairfax.

The stated objective of the agreement was to "consult with each other on key matters affecting Fairfax with a view to enhancing shareholder value".

The parties told the stock exchange they had a combined stake of 15.14 per cent in Fairfax. Gutenberg, Macquarie Radio Network and two vehicles associated with Mr Carnegie's Companion Fund bought 0.15 per cent of the company, or 3.6 million shares worth $1.8 million at Monday's closing price of 51¢, up 3.5¢ on the day.

Mr Carnegie and Mr Singleton had hoped to acquire up to 4.9 per cent of Fairfax before informing the market but were told by lawyers Gilbert and Tobin, who drafted the consultation agreement, that they must disclose their association with Ms Rinehart.

It is understood Gutenberg was not buying yesterday, when another 18 million shares changed hands.

Mr Singleton and Mr Carnegie together own the majority of Macquarie Radio, which last year bid unsuccessfully for Fairfax Media's radio assets, including Sydney's 2UE and Melbourne's 3AW.

In a statement on Friday Mr Singleton said Gutenberg had bought into Fairfax Media as a result of the board definitively closing the door on a sale of their radio assets to Macquarie Radio.

BBY media analyst Mark McDonnell said Monday's share price reaction confirmed that Fairfax was "in play".

He said Ms Rinehart may not require long-term retention of the radio stations at Fairfax, while Mr Singleton's remarks suggest he is more interested in the radio stations.