Singleton and Carnegie deal with Rinehart has Fairfax 'in play'
FAIRFAX Media shares surged more than 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 Mr Singleton and Mr Carnegie's Gutenberg Investments Unit Trust and Mrs 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 sharemarket 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 + Tobin, who drafted the agreement, that they must disclose their association with Mrs Rinehart.
It is understood Gutenberg was not buying on Monday when 18 million shares changed hands.
Mr Singleton and Mr Carnegie own the majority of Macquarie Radio, which last year bid unsuccessfully for Fairfax Media's radio assets.
On Friday, Mr Singleton said Gutenberg had bought into Fairfax Media as a result of the company's board closing the door on a sale - or joint venture - of its radio assets to Macquarie Radio.
BBY media analyst Mark McDonnell said Monday's share price reaction confirmed that Fairfax was "in play".
Earlier he said Mrs Rinehart, who failed in a bid for a board seat in 2012, "may not require long-term retention of the radio stations at Fairfax, so it's entirely possible a deal has been struck or is under discussion" between her and Mr Singleton.
Mr Singleton's remarks "suggest that he is still more interested in the radio stations than anything else", Mr McDonnell said.