Fairfax's Domain will begin trading on the ASX in two weeks after shareholders "overwhelmingly" voted in favour of the plan to spin off the profitable real estate listings business from the news publisher.
More than 1.7 billion shares, or 99.93 per cent, were voted in favour of the separation at the company's annual general meeting on Thursday.
Under the approved plan, Fairfax will retain a 60 per cent interest in Domain and shareholders will hold the remaining 40 per cent - receiving one share in a newly listed Domain for every 10 Fairfax shares owned.
Shareholders will also retain their existing Fairfax shares.
Chairman Nick Falloon said the vote marks the next step in Fairfax's evolution as a separate ASX-listed company.
"The separation of Domain reshapes the Fairfax portfolio by adopting a more flexible corporate structure to maximise shareholder value," Mr Falloon said on Thursday.
Fairfax has been building toward the separation of its lucrative Domain business following the July decision by US private equity raiders TPG and Hellman & Friedman to pull out of moves to acquire the media company, due to the group's unwieldy business model.
The property business contributed nearly 20 per cent of group revenue over the 12 months to June 25 and more than 40 per cent of underlying earnings, as the media group swung back into the black with a $83.9 million full-year profit for 2016/17.
The board had unanimously recommended that shareholders voted in favour of the separation, saying it was in their best interests and would, over time, deliver greater value than the current structure.
The relationship between the media group and Domain, which will be led by Antony Catalano, will be similar to that between rival News Corp and ASX-listed property advertiser REA Group.
Citi analysts, David Kaynes, Kofi Mensa and Manisha Sanilaya said Domain Digital should be valued at a premium to REA, given its faster revenue growth, lower depth penetration and greater exposure to non-classifieds.
But, after including Domain's print division, Citi expects the business will trade at a modest discount to REA.
"Unlike REA, Domain earns 21 per cent of group revenue and 13 per cent of group EBITDA (earnings) from its print operations, which will continue to decline," Citi said in an note to investors.
Citi also forecast a jump in listing volumes - which have been a significant headwind for Domain - as the property market cools.
"Auction clearance rates are finally starting to decline and while current rates are still well above the long-term average, the trajectory is clear," Citi said.
"If the supply of properties continue to increase, and particularly if Melbourne follows Sydney's lead, we anticipate that clearance rates will continue to fall."
Domain will commence trading on the ASX on 16 November 2017.
Fairfax shares gained 0.5 cents to $1.095.
