Publishing and Broadcasting Ltd is poised to offload half of its media assets, including the Nine Network, ACP Magazines and ninemsn, to a private equity company in a deal expected to be announced this afternoon.
The deal is expected to net PBL $4 billion and would reduce its exposure to its most troubled assets, an analyst says.
It is believed PBL executive chairman James Packer is seeking to focus on the company's growing gaming portfolio, and create a new media spin-off as the federal government re-shapes Australia's media ownership laws.
Speculation also surrounds whether Packer will make a bid for long-term media rival, newspaper group Fairfax.
Trading in PBL shares, which hit record levels on Monday, was halted at the company's request yesterday, pending the release of an announcement.
Goldman Sachs JBWere analyst Christian Guerra believes the move is a positive one for PBL.
"We believe the selldown of PBL's media assets into a separate company would be positive," Mr Guerra said in a research note.
"The deal reduces PBL's exposure to its most troubled assets, while providing additional capital which PBL can redeploy into higher growth businesses.
"A potential negative is reduced transparency if the new company was to be equity accounted and also unlisted."
PBL is expected to announce the sale of its media assets to Hong Kong-based private equity group CVC Asia Pacific, which reportedly outbid rivals including US funds Newbridge Capital and Kohlberg Kravis Roberts.
The Packer-family's PBL is likely to retain a 50 per cent stake — and management control — in the newly formed company, likely to be called PBL Media.
Mr Guerra said the strategic positioning of a separate company within the media space "will be a powerful one" given the potential funding strength behind it.
"The pursuit of additional media assets to create a domestic media conglomerate is now permissible under the proposed new legislation," Mr Guerra said.
"In addition, the deal could provide the flexibility for PBL to meet the future funding needs of its various growth options including Macau, and potentially Singapore, the UK and Russia.
"Ultimately, the remaining gaming side of the business could be privatised."
JBWere has a short term "outperform" recommendation and a long term "buy" recommendation on PBL shares.
Mr Guerra said JBWere's PBL investment case was premised on the view that the current share price "does not fully value the investments of the company or its strategic growth options".
"We await details of the proposed transaction to assess whether this latent value is now realised," he said.
PBL's shares hit an all-time intraday high of $20.08 Monday before finishing at a record close of $19.85, up 42 cents.
The trading halt on PBL shares will remain in place until the open of trading on Thursday or until the announcement has been made.
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