Fairfax Media to sell slice of Trade Me

Plans by media company to sell 30-35 percent of online auction site in an initial public offer

The public will have a chance a buy intoTrade Me with Fairfax Media announcing today it plans to sell a 30 to 35 per cent stake in the company in an initial public offer.

The timing of the IPO has not yet been finalised or the amount of money being sought.

Fairfax CEO Greg Hywood made the announcement to the ASX this morning and says the money raised would be used to reduce debt and increase shareholder dividends.

In Fairfax's full year results to June 2011 released today, it shows Trade Me revenue was up 12 per cent.

Trade Me says it couldn't say much at this stage because of the rules around pre-prospectus publicity set out in the Securities Act but it was ''business as usual'' at this stage.

''Our focus on providing a safe and trusted marketplace for Kiwis to buy and sell will remain the same,'' it says.

The IPO remains subject to financial market conditions but if it goes ahead would see Trade Me become a stand alone, public-listed company on the NZX and consideration would also be given to an ASX listing.

Trade Me founder Sam Morgan will be on the new board of Trade Me and it will be chaired by former Fairfax boss David Kirk.

Analysts have valued Trade Me at $1.3 billion to $2 billion. It has 2.7 million registered traders and employs 190 staff in New Zealand.

Since Fairfax Media bought Trade Me for $700 million in 2006, under the leadership of former Fairfax chief and World Cup-winning All Black David Kirk, it has been the trans-Tasman company's star performer.

Kirk told around 2000 delegates at Microsoft's Tech.Ed conference this week that when Fairfax acquired Trade Me some questioned the $750 million price tag. He said at the time unfavourable comparisons were made with the price Fairfax paid for New Zealand’s indigenous auction website and that which Rupert Murdoch’s News Corporation paid for the then-hip MySpace social networking site. It was felt Murdoch had driven a harder bargain.

While the company does not split out Trade Me specifically, the auction site makes up the majority of the 17 percent of earnings contributed by the "online" sector to the Fairfax pie.

Fairfax's market value is around A$2.3 billion ($3b).

Fairfax Media is publisher of Computerworld.

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