Shares of Nine Entertainment Co. Holdings (ASX:NEC) have surged after it announced it would be selling its live events and ticketing business Nine Live. The company will be selling its division to the Hong Kong-based Affinity Equity Partners for $640m. CEO David Gyngell said the deal would allow Nine Entertainment to focus on its other ventures while also returning more value to shareholders. “With the sale of Nine Live, our focus now is on optimising the performance of our free-to-air TV, digital and subscription streaming businesses and maximising returns to our shareholders,” he said. The deal is Affinity’s single largest acquisition and its second in Australia in the last 12 months. Last year in October, the Hong Kong company paid $336m for a one-third stake in Virgin Australia Holdings Ltd.’s frequent-flier program.
The sale will finish on 31 July and will provide net proceeds of about 64 cents per share. Mr. Gyngell said the proceeds would also allow the company to increase its $150m share buyback program announced in February. Its annual dividend payout ratio will increase by 80 to 100 per cent of the company’s net profit. After the acquisition deal is complete, Nine Entertainment “will be in a net cash position, with undrawn bank facilities, providing significant balance sheet flexibility to explore future options as they arise,” the report to the ASX said. Shares of Nine Entertainment are up 10c, or 4.65 per cent, at $2.25 per share around 1:43pm on Thursday. NEC has fallen 3.85 per cent in the last 12 months but is up 17.80 per cent so far this year.
Author: Imran Valibhoy
Apr 16, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.