Nine Entertainment (NEC) shares went for a little run yesterday after it announced a boost to its dividend and share buyback program, in the wake of selling its Nine Live (Ticketek) business to a private equity company for a total value of $640 million.
Hong Kong-based Affinity Equity Partners bought the business after approaching Nine earlier in the year.
“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,” said Nine CEO David Gyngell in a statement to the ASX yesterday.
Nine said it will use the funds to add to its already announced $150 million share buyback and, effective from the 2015-16 interim dividend (in 10 month’s time), will “sustainably increase the annual dividend payout ratio to 80%-100% of net profit after tax (pre-significant items), the majority of which is expected to be franked”.
The company announced an interim dividend of 4.2c a share at its first-half results in February.
Mr Gyngell said after completion of “this exciting development", which is expected by July 31, Nine would be in a net cash position, giving the company "significant balance sheet flexibility to explore opportunities as they arise".
"The fact that the sale came to us as an unsolicited offer attests to the respect for Nine Live in the wider business community" and showed how "from its beginnings as single ticketing business, Ticketek [has grown] into a very successful major touring and events business".
"We will all continue to work closely together into the future while both businesses have capital investments that will allow us to grow and take advantage of new opportunities as they present themselves," Gyngell said.
Nine shares rose 3.72% to $2.23 after touching a 52 week time high of $2.36 during trading.
NEC 1Y – Nine set to lift dividend
Meanwhile, media reports Friday morning say that one of Nine’s two big US investor/saviours, Oaktree Capital last night sold half its 14% stake in the wake of the sale of Nine Live to Affinity. The deal was done at a reported $2.215 a share, a small discount to yesterday’s close.
The sale reduces the combined stake of Oaktree and its fellow US fund, Apollo Global Management to around 28% (Apollo has around 21%).
