Nick Bolton backs Antony Catalano bid to block Nine-Fairfax merger

Nick Bolton has emerged as a backer of Antony Catalano’s 11th-hour plan to derail the Fairfax-Nine merger.

Aurora Funds Management owner Nicholas Bolton.

Controversial greenmailer Nick Bolton has emerged as a backer of former Domain boss Antony Catalano’s 11th-hour plan to derail the $4 billion merger between Fairfax Media and Nine Entertainment.

Mr Bolton’s investment vehicle Aurora Funds Management and Mr Catalano are set to appear before judge Jacqueline Gleeson in the Federal Court in Sydney this morning in a desperate bid to stop the merger, which has already been approved by Fairfax shareholders and the competition regulator.

Mr Bolton shot to fame nearly a decade ago, after mounting a $4 million raid on Macquarie Group-backed toll road BrisConnections at the age of 26. He bought 77 million units through his company Australian Style Investments for 0.01c, attempting to wind up the under-pressure company through a shareholder vote and being accused of “greenmail”, which forces the other shareholders to buy back shares at a higher price.

On the eve of the vote, it was revealed that Mr Bolton had received a $4.5m payment from a BrisConnections shareholder, construction company Thiess John Holland, in return for abstaining from the wind-up vote.

For Fairfax, separate submissions were expected to be lodged with the Federal Court last night, raising technical issues over the procedures adopted during the recent scheme of arrangement and whether they complied with the Corporations Act. Other issues will centre on Fairfax’s obligations to shareholders.

Corporate regulator ASIC is still deciding its position, but isn’t expected to oppose the merger in the Federal Court.

Mr Bolton, who is Aurora’s biggest shareholder with a stake of about 49 per cent, last night ­declined to comment on the matter, referring all questions to ­Aurora managing director John Patton, who did not return calls.

Mr Catalano, who owns a 1.2 per cent stake in Fairfax, told The Australian he had secured ­financial backing to buy a 20 per cent stake in Fairfax — worth almost $300m — and that he wanted the Federal Court to reject or defer final approval of the merger.

Mr Catalano said his proposal was superior to the Fairfax and Nine cash-and-scrip merger, and planned to tell the Federal Court that there were several concerns with the merger and that there was support from shareholders for the board to consider alternatives.

Under the deal, Fairfax shareholders will get a mix of cash and scrip, including 0.3627 Nine shares and 2.5c for each Fairfax share held. This implied a 22 per cent premium to Fairfax’s share price of 77c the day before the deal was announced.

Fairfax shares rose 0.8 per cent to 63c yesterday, while Nine closed 1.8 per cent higher at $1.70.

Fairfax has shrugged off Mr Catalano’s last-minute court challenge.

“We are not aware of a single reason why we would do anything other than proceed as planned,” a spokeswoman for Fairfax said yesterday.

The merger, which was unveiled on July 26, was given the green light by the Australian Competition & Consumer Commission on November 8, despite the regulator conceding it would weaken competition across the media sector. Fairfax shareholders approved the merger last week after dismissing Mr Catalano’s last-minute move to spoil the tie-up.

Mr Catalano voiced his opposition to the merger by sending a letter to Fairfax chairman Nick Falloon on November 18, the eve of the Fairfax shareholder merger vote.

Mr Falloon told shareholders at the meeting about Mr Catalano’s letter, telling them that it did not contain an “actual proposal that could be considered” by shareholders as an alternative to its deal with Nine.

In the final vote, 81.49 per cent of Fairfax shareholders backed the deal.

If the merger is approved by the Federal Court today, it is expected to be completed on December 7.

The merged company, to be called Nine, will consist of Nine’s free-to-air television network and digital business 9 Now, plus Fairfax’s Australian and New Zealand mastheads, including the The Sydney Morning Herald, The Age and The Australian ­Financial Review.

The group will also own a near 60 per cent stake in ASX-listed online property listing group Domain and a 54.5 per cent shareholding in listed-radio network Macquarie Media, home of Sydney’s 2GB and Melbourne’s 3AW.

Nine shareholders do not need to vote on the merger as the company will own 51.1 per cent of the enlarged group, with Fairfax shareholdings holding the remaining 48.9 per cent.

Nine declined to comment on Mr Catalano’s latest move.