Mystery bid for Stuff cited in judge’s rejection of petition

AUCKLAND: News publisher Stuff has received a takeover offer from a mystery bidder and could suffer ‘‘very significant losses’’ if it does not wrap up a deal by May 31, a High Court judge has ruled in her refusal of an attempt to stop negotiations by rival NZME.

NZME sought an interim injunction against Stuff’s owner, Sydneybased Nine Entertainment, last Friday, which was refused on Monday.

‘‘Granting the interim orders sought by NZME may increase the risk of Stuff ceasing operations,’’ Justice Sarah Katz says in her ruling.

‘‘Quite simply, from Nine’s perspective time has run out for the NZME deal. There is no longer any realistic prospect of the deal coming to fruition in a timeframe that is acceptable to Nine,’’ she said.

Business-Desk has already reported that Nine was ready to close Stuff down by May 31, although Nine has denied this. It is not explicit in the redacted judgement that this is the case, but a May 31 deadline is mentioned several times in the 11page ruling.

Business-Desk understands lawyers were still arguing over redactions to the judgement on Wednesday, and Justice Katz she said will revisit interim suppression orders next month.

Justice Katz’s reasons for her decision, released yesterday, stresses the importance of timing and reveals an offer for Stuff had been made by an unnamed competing bidder on May 6.

In determining the urgent application made last Friday, the High Court at Auckland said delays caused by an interim injunction to Nine, and the fact continuing negotiations meant that NZME would get to see Stuff’s highly sensitive commercial information, meant it was unjust to force them back to the negotiating table.

The decision reveals that NZME and Nine restarted merger talks last September and that talks with the Government between October and March on a ‘‘KiwiShare’’ option that would have bypassed the Commerce Commission’s 2017 rejection of an earlier merger proposal got nowhere.

‘‘Following the onset of the Covid19 pandemic and an associated decline in Stuff’s advertising revenues, time became of the essence,’’ the decision said. The sentence immediately following this is redacted.

Nine told NZME of the competing offer on May 7, a day after it was received, and gave NZME the opportunity to match it or end negotiations. NZME said Nine had breached its exclusivity agreement by engaging with the mystery bidder and that it needed access to its dataroom to work out how to match the offer.

But Nine had withdrawn access and argued there was no realistic prospect of NZME meeting the competing offer because the deal with the new bidder does not require Commerce Commission clearance. It argued that the exclusivity agreement was frustrated, or not performable, by May 6 when the competing offer was made.

NZME’s lawyer, Jack Hodder QC, had told the court it could not rule out lastminute government intervention to progress the deal without Commerce Commission clearance.

‘‘Given the tight timeframes involved, that appears to be the critical (and determinative) differences between the competing offers,’’ the judge said, indicating she had to let Stuff out of the exclusive talks.

‘‘For the reasons I have outlined, it appears that granting the interim orders sought by NZME may increase the risk of Stuff ceasing operations.’’

As an additional factor, Justice Katz said she considered the impact of loss of media plurality, and job losses. She added that damages were unlikely to be a suitable remedy for either party.

Justice Katz’s judgement has several redactions and Business-Desk understands lawyers for the parties were still arguing over what could be published and what could not on Wednesday morning. Interim suppression orders will be revisited on June 5.

The decision was made on Tuesday, following which NZME withdrew its an application to the Commerce Commission for clearance to buy Stuff for $1. The merger had been blocked by the regulator and the decision to stop the two from merging had been upheld by the Court of Appeal in 2018.

The identity of the second bidder is unknown. NBR publisher Todd Scott has repeatedly cited his desire, backed by Sydneybased Anacacia Capital, to take over Stuff’s web operations but not its print assets. Anacacia has declined to comment.

Also known to be considering potential media investments in New Zealand is Mercury Capital, another Sydney private equity firm. It is headed by expatriate New Zealander Clark Perkins and includes millionaire Craig Heatley as an investor and board member, along with former Fay Richwhite director and Auckland commercial lawyer Geoff Ricketts.

❛ Following the onset of the Covid19 pandemic and an associated decline in Stuff’s advertising revenues, time became of the essence