Antony Catalano eyes Domain return

The former Domain chief executive Antony Catalano has launched an eleventh-hour attempt to block Nine’s bid for Fairfax Media, indicating he would buy up to 19.9 per cent of Fairfax to then implement a Domain-led turnaround strategy for the ailing media group from a board seat.

Fairfax shareholders meet today to vote on whether to push ahead with the $4 billion merger, which would mark the end of the 177-year-old publisher as a stand-alone company. 

The Fairfax board met early Monday and unanimously urged a vote for the merger.

The merger needs 75 percent of total votes cast.

Catalano hit out at the Fairfax plan, saying the current proposal did not apply a sufficient premium for control of Fairfax’s majority-owned digital real estate arm, Domain.

He said $740 million in value in the share takeover had been lost since the planned merger was announced in July.

Catalano's friend, the billionaire investor Alex Waislitz has said he planned to vote his Fairfax shares against the merger. 

“I’m not going to back the merger ... even though I can see there is some structural and ­strategic benefits to having the wider platform for products to be sold across, and also there are a lot of synergy benefits to it,” he told The Australian.

Mr Waislitz’s listed fund Thorney Opportunities and private fund Thorney Investment Group combined own more than 50 million Fairfax shares., about two per cent of the company.

“(Nine’s) Hugh Marks and the team there have done a good a job at Nine. However, I do think they have been clever at buying Fairfax at a very good price and with the recent fall in the share price Fairfax shareholders are missing out on a lot of value with the scheme going ahead,” he said.

The merged Fairfax will consist of Nine’s free-to-air television network, home to reality shows such as Married At First Sight and The Block, and digital business 9Now, plus Fairfax’s Australian and New Zealand mastheads, including the The Sydney Morning Herald, The Age and The Australian Financial Review. 

In a letter sent to Fairfax Media chairman Nick Falloon last night, and obtained by The Australian, Catalano proposed acquiring an interest of up to 19.9 per cent in Fairfax Media “at a price superior to the intrinsic market-to-market value of (Nine’s proposal) of up to 65c per share”.

Shares in Fairfax closed on Friday at 61.6c.

“As the former CEO of ­Domain, I have a unique knowledge of that business, and accordingly believe that I could provide significant assistance in optimising its value for Fairfax shareholders, along with providing a strategy for the balance of Fairfax’s valuable assets,” Mr Catalano said.

He asked Mr Falloon to ­adjourn the shareholder meeting for at least two weeks to allow shareholders and the Fairfax board to properly consider his ­alternative proposal. 

“Through my inquiries, I understand that the general sentiment of Fairfax major shareholders is that the merger scheme (at current prices) is a disappointing outcome and that an alternative outcome is an option that could find considerable support that could see Fairfax shareholders achieve full value for their holding,” he said.

“I intend to then have Fairfax pursue a multi-pronged strategy to build and realise value for Fairfax shareholders. This strategy ­includes the divestiture of non-core assets, building the Domain franchises and pursuing asset sales with a suitable control premium not presently factored into the (Nine) scheme, with all proceeds to be returned to Fairfax shareholders as cash distributions or by way of share buybacks.’’ 

The former property reporter Catalano spent more than four years at the helm of Domain, but just two months fronting the publicly listed Domain company, quitting the digital real estate group in January.

Nine Entertainment has left the door open to sweeping up minority stakes in Domain after any merger with Fairfax Media.