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Fairfax SELLS NZ Online Classifieds Site TRADE ME… for a profit!

Posted: December 18th, 2012 | Author: | Filed under: Media, Print Media | Tags: , , , , | Comments Off on Fairfax SELLS NZ Online Classifieds Site TRADE ME… for a profit!

Fairfax Media AustraliaFairfax is selling its remaining 51 per cent stake in New Zealand online classifieds site Trade Me for over $600 million. The struggling media company is selling its shares for $3.05 each, in a sale underwritten by UBS that will raise a total of $616 million.

Fairfax reckon that the money will be used to pay down its extremely large debt burden. The company’s chief executive Greg Hywood says cutting debt will allow the business greater flexibility in adapting to the new media environment.

“The proceeds from the sale will reduce Fairfax’s net debt and will provide us with a very strong balance sheet and the financial flexibility to invest and to complete the company’s structural transformation,” Mr Hywood said in a statement. “So when you look at the sale of both parts, despite selling at a discount, Fairfax has sold the entire Trade Me business for just over a billion dollars, giving it a $413 million profit.”

This dramatically reduces Fairfax’s debt down to around $230 million, which means that Fairfax can concentrate on rejuvenating it’s Australian business interests. Post sale, Fairfax will no longer have any stake in Trade Me. Mr Hywood says the firm has learnt some valuable lessons about the online environment through its six-year ownership of Trade Me.

“Trade Me has been a great business for Fairfax and we have learned a great deal more about the successful operation of digital businesses over the years since we acquired Trade Me for $NZ750 million in 2006.”