Australian Community Media executive chairman Antony Catalano has proposed selling some of his company’s most storied publications, including The Newcastle Herald, Illawarra Mercury and The Canberra Times, to Southern Cross Media in exchange for a major stake in the ASX-listed group.
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I’m guessing the Daily Advertiser/Bendigo Advertiser would need to be either kept by Catalano or sold to another company in this scenario? It would mean SCA has 10, Hit, Triple M and Advertiser which IIRC would be against the 2 out of 3 rule.
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Not necessarily the 2 out of 3 rule (which was scrapped in 2017), but the 4/5 rule, where a regional market needs to have at least 4 media voices in a regional radio market (5 in metro markets).
At present, Bendigo is at a minimum of 4 media voices (SCA, Seven, WIN, ACM). ARN owns a local station (Gold Central Victoria), but that falls under the Maryborough (Vic) RA1 licence area.
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From Seven:
Seven West Media acquires strategic equity interest in ARN Media Limited
Seven West Media Limited (ASX: SWM) today announced that it has acquired a 14.9% shareholding in ARN Media Limited (ASX: A1N) as a strategic equity investment in the media sector. SWM has also entered into a cash-settled equity swap with Barrenjoey Markets Pty Limited relating to a further 5.0% of A1N.
SWM has existing and long-standing commercial partnerships with A1N and has an interest in ensuring their continued and long-term success via a direct investment in A1N.
SWM is aware of the recent ASX announcements regarding non-binding indicative proposals involving A1N and others around consolidation in the sector, including developments over the last several days. SWM is supportive of A1N’s current business direction. SWM has no intention of launching a takeover for A1N (in the absence of an alternative control proposal) or Southern Cross Media Group Limited (ASX: SXL).
SWM Chairman, Mr Kerry Stokes, said: “Seven West Media has a disciplined approach to value creation in the media sector. We believe that this strategic holding presents strong value for our shareholders in light of sector consolidation activity.”
SWM acquired the shares at $1.10 per A1N share. SWM spent approximately $50.1 million in acquiring the 14.9% shareholding and has prefunded the swap on an equivalent pricing basis. SWM will lodge the ASIC Form 603 “Notice of Initial Substantial Shareholding”.
The share purchase and swap pre-funding will lift SWM’s pro-forma FY23 leverage from 0.9x (net debt / EBITDA) to approximately 1.15x. To the extent current advertising market conditions result in SWM leverage being above the target 1.0-1.5x band at the end of December 2023, the recently announced $60 million in cost initiatives would be expected to bring leverage back within the target range within a short period of time.
SWM Managing Director and Chief Executive Officer, James Warburton, said: “SWM’s objective is to be Australia’s most connected news, sport and entertainment brand. Our investment in A1N aligns with our strategic pillar of partnering for growth, and we look forward to continued collaboration across our two companies.”
This release has been authorised to be given to ASX by the Board of Seven West Media.
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The ACM offer stinks. Catalano and co just want out of the newspapers which they’re still worth something. The offer does nothing to improve SCA’s position. No change in debt. No benefit to existing shareholders. The ARN/ACP offer pays off the debt which has been an ongoing struggle for SCA for some time and gives shareholders shares in a company which should have good ongoing prospects.
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Agreed! SCA’s board would be mad to accept ACM’s offer over ARN/ACP’s. I understand that their pride might come into it (being taken over by a competitor), but ARN’s offer is decent.
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The more I think about it, the more it appears to be the precursor for an SCA split - Regional Newspapers + TV (and maybe some Radio) in one company and the remainder (Metro broadcasting + Podcasts) in another.
I’m not sure its any better or worse than the ARN offer from an industry perspective
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About $1 per share less than what they should be offering shareholders IMO.
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How do you figure that? The amount in the proposal is 29% higher than what the share price was at the time.
The offer amount will no doubt change as SCA shares are now higher than the ARN proposal. Investors clearly like the ARN proposal.
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I would have thought a proposal at between 1.20 and 1.50 a share would make it hard to vote against (and still be reasonable value for ARN).
I’m a little bit surprised that SCA’s share price has been able to maintain the premium over the price at the ARN offer, especially considering theres potentially issues with the Takeovers Board
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From the AFR:
Southern Cross Austereo is set to say thanks but no thanks to Antony Catalano for his proposal to acquire the radio and television broadcaster, Street Talk understands
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Thank god! Appreciate the update @MarkHD.
Most of us analysts here could’ve told Cat that.
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Courtesy Mumbrella
On a new episode of the Mumbrellacast, Mumbrella publisher – and former national director of operations and general manager of 2DayFM and Triple M Sydney – Adam Lang, said SWM’s stake in the ARN/SCA media wars could have a huge impact on the takeover proposal.
“I think the pressure’s on to do the deal more quickly,” Lang said.
“So, Seven West Media have said, ‘we want to back our ARN’s plan’… coming in and backing ARN and not SCA means ARN’s desire to close this deal by December probably has greater likelihood now than it did before the weekend.”
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Confirmed by ASX Release on the 15th:
SCA has considered with the assistance of its advisers the ACM Proposal and determined that it
would not be in the best interest of SCA and its shareholders to further progress the ACM Proposal.One of the reasons for this is that the ACM Proposal involves the acquisition by SCA of regional print
and digital assets which is not consistent with SCA’s strategy.“All About Audio” is a key driver of SCA’s strategy, differentiation and growth pathway. SCA’s
operating strategies and investments are focused on building Australia’s leading audio company to
deliver compelling returns for our investors.
Not really that surprising - the deal felt like it was a way to shift some rubbish investments around
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Guess who’s just lowered their share in SCA?
16% > 11%
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Who? Allan Gray?
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Yep
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