NZME will pay $55 million in cash and issue shares giving Australia's Fairfax Media a 41 percent stake if a planned merger of the two publishers is given the go ahead.
The two media companies signed a merger implementation agreement subject to various approvals that would see NZME add another $90m to its banking facility so it could buy all the shares in Fairfax New Zealand in a cash and scrip deal, NZME said on Wednesday.
The companies have identified a number of areas where a merged entity can avoid double-ups, which NZME said would lead to one-off costs being incurred.
"We are delighted to have progressed merger negotiations to this stage and to be in a position to shortly put this proposition to NZME shareholders," chief executive Michael Boggs said.
"The merger will present opportunities for NZME to significantly enhance our integrated offerings to both our audience and our advertising clients."
High levels of indebtedness put the Australasian media companies in precarious positions over the past decade, forcing them to sell assets and cut the size of their newsrooms and the merger is seen as a way they can start competing online.
The companies are seeking Commerce Commission authorisation for the deal, but the antitrust regulator has delayed its final decision until March next year, saying it needs more time to assess the impact on both news content and the advertising market.
Overseas Investment Office approval will also be needed to get over the line.
Fairfax Australia would get two directors of the enlarged company if the deal is approved.
NZME shares last traded at 73 cents on the NZX, valuing the company at $143.1m. Fairfax's shares closed at 98 Australian cents on the ASX, valuing it at $A2.25 billion ($NZ2.33 billion)