News: NEC UPDATE 1-Australia's Nine to buy Fairfax Media in $1.6 bln deal

• Fairfax shareholders to receive Nine shares and cash
• Nine offer a 22 pct premium to Fairfax's last close
• Fairfax chairman says deal represents "compelling value"

(Adds details on deal, context, Fairfax chairman comment)

July 26 (Reuters) - Two of Australia's traditional media heavyweights said on Thursday they would join forces with Nine Entertainment Co Holdings Ltd (NEC) agreeing to buy Fairfax Media Ltd (FXJ) for A$2.16 billion ($1.6 billion).

Under the offer, Fairfax shareholders will receive 0.3627 Nine shares and A$0.025 in cash for each Fairfax share, the companies said in a joint announcement.

The offer translates to A$0.94 per Fairfax share, representing a premium of 22.1 percent to Fairfax's last close.

Nine shareholders would own 51.1 percent of the combined entity, while Fairfax shareholders would own the remaining 48.9 percent.

The new entity would be led by Nine Chief Executive Hugh Marks, while three Fairfax directors would be invited to join the board, the companies said.

Fairfax Chairman Nick Falloon said in a statement the transaction "represents compelling value for Fairfax shareholders".

($1 = 1.3428 Australian dollars)