Fairfax grabs Kiwi tender site
by Paul McBeth
Dec. 13 (BusinessDesk) – Fairfax Media Ltd., the Australian parent of Trade Me, and The Dominion Post and Press newspapers, has bought the Southern Hemisphere’s biggest tender notification service.
ASX-listed Fairfax will pay will pay as much as $21.6 million for New Plymouth-based Tenderlink.com Ltd., building up its stable of internet-based applications in a bid to replace dwindling classified advertising revenue, a stream once described by Rupert Murdoch as his ‘rivers of gold’.
Fairfax paid $720 million for the online auction site Trade Me Ltd. in 2006.
“Tenderlink fits our strategy of acquiring high growth transactional businesses that provide services to the SME market,” Fairfax Digital CEO Jack Matthews said in a statement. “This already profitable business has considerable further potential for growth.”
The $21.6 million price tag is at the top of a range, based on anticipated earnings before interest, tax, depreciation and amortisation, and represents an earnings multiple of eight times.
The Trade Me deal, which was was much-derided at the time, has since provided a buffer to the Australian media organisation, which helped underpin a 22% increase in the digital unit’s earnings to A$111 million in the year ended June 30, or 17% of total underlying earnings.
That’s seen a turnaround in analysts’ outlook on the auction site, with Morgan Stanley researchers valuing the platform at between A$1.1 billion and A$1.3 billion.
Tenderlink provides subscribing suppliers and purchasers an electronic platform to negotiate the tender process.
It focuses on construction, local government, utilities and universities, with its biggest clients including Fletcher Construction, Boeing, Transfield and Energy Australia.
Philip Brown, the chief executive who founded Tenderlink in 1994, said the deal will help the company speed up growth into the Australian market.
The company has 38 New Zealand staff and nine in Australia. The deal is subject to certain conditions, and is expected to be completed within 45 days.