WIN’s Bruce Gordon outed as buyer of Nine Entertainment shares

The share deal all but confirms Bruce Gordon is pursuing a merger with Nine if media reforms are approved.

WIN owner Bruce Gordon is the biggest shareholder in Nine Entertainment. Picture: Renee Nowytarger

The identity of the mystery buyer behind a share raid on Nine Entertainment has been revealed as WIN owner Bruce Gordon.

A substantial holder notice to the stockmarket all but confirmed that Mr Gordon was pursuing a merger with Nine if the federal government’s media reform package was approved by parliament.

A voluntary filing yesterday by corporate lawyers Atanaskovic Hartnell disclosed that Mr Gordon’s private company, Birketu, took a 3.4 per cent stake worth about $50 million.

Since the share raid on Thursday, industry sources have been pointing the finger at WIN, Nine’s affiliate partner, but only now has it been confirmed.

Mr Gordon is Nine’s biggest shareholder, with a 15 per cent holding. The notice said Birketu had taken a “derivative position in relation to the ordinary shares of Nine”.

While the deal pushes the limits of current media ownership laws, industry observers said it does not breach the Broadcasting Services Act because the transaction had been undertaken as a cash-settled equity swap, which means Mr Gordon has not ­entered into a physically settled swap transaction.

Deutsche Bank has essentially purchased shares on behalf of Mr Gordon’s Birketu for a limited ­period of time. This is a private contract in which the other party will cover any losses should the share price fall, but will also ­receive all the ­upside.

At the end of the contract, the differences are paid out in cash. However, the bank can also settle the contract by handing over the actual shares.

In recent years, investors have used equity-swap transactions to stalk target firms, without initially having to put up substantial amounts of capital.

The move does not infringe corporate transaction rules set out by the Australian Securities & ­Investments Commission.

Under Australian corporate law, Mr Gordon can increase his economic ­interest in Nine to 19.9 per cent.

Still, the Australian Communications and Media Authority said it was “actively monitoring the situation” now the transaction had been filed to the stockmarket.

“The ACMA is aware of the ­recent ASX announcement by Bruce Gordon, Birketu Pty Ltd and WIN Corporation Pty Ltd,” a spokeswoman for ACMA said.

The move could have the effect of putting off any other would-be investors in Nine.

The company has become a prime acquisition target after US hedge fund Apollo sold out last year, selling 13 per cent to Mr Gordon. He began building his stake in March last year, as first revealed by The Australian.

It comes as the federal government pushes media reforms that would enable WIN to merge with Nine. The Coalition partyroom last week gave its formal approval to the bill to scrap the “reach rule” that prevents any TV broadcaster reaching more than 75 per cent of the population.

The rule blocked takeovers of regional networks by Nine Entertainment, Seven West Media and the Ten Network.

The partyroom also endorsed the repeal of the “two out of three” rule that restricts any company owning more than two traditional media platforms in a market.

Mr Gordon, who splits his time between Wollongong and Ber­muda, has played a key role in Australian television since the late 1970s. He also owns a 15 per cent stake in Ten Network.