Southern Cross Austereo and Seven West Media agree to merge
Make us a preferred source
Make us a preferred source on Google
More news: Shares in Southern Cross Austereo rose more than 10% to 93 cents per share in early trading, after the company announced it’d agreed to an all-scrip merger with Seven West Media.
Seven West shares were up 7.14% to 15 cents.
In a note to clients, E&P Financial Group’s analyst Entcho Raykovski said Seven is likely looking to benefit from any upside to the Southern Cross share price from current levels.
What they said: “While unusual to see a deal agreed at a discount to current trading levels, SWM could well benefit from (1) any upside in SXL and (2) increased liquidity assuming the deal completes,” he wrote.
Southern Cross Austereo and Seven West Media agree to merge
The news: Southern Cross Austereo and Seven West Media have announced an agreement to merge the two companies, in a deal that would have significant implications for the Australian media sector.
The numbers: Under the proposed merger, Seven shareholders would receive 0.1552 Southern Cross shares for every Seven share, which would hand 50.1% of the new company to Southern Cross shareholders, with Seven shareholders taking 49.9% of the combined group.
The context: In an announcement to the market today, Southern Cross said the management teams from both companies expect the deal to deliver between $25 million and $30 million in annual pre-tax cost synergies.
The transaction is expected to be up to 100% EPS accretive to Southern Cross shareholders, the company said.
The Seven board said it unanimously recommends the deal to shareholders. Southern Cross chair Heith Mackay-Cruise said the board believes the proposal is in “the best interests” of Southern Cross shareholders.
Under the proposal, Seven chief Jeff Howard would be the managing director and CEO of the combined group, with Southern Cross CEO John Kelly taking the role of group managing director, audio.
Seven chair Kerry Stokes would chair the board of the combined group, until stepping down in February 2026 and transitioning the role to Mackay-Cruise.
Following this, the board would be made up of four representatives from the Seven board, including Howard, Teresa Dyson, Michael Malone, and Ryan Stokes.
It would also have three representatives from the Southern Cross board, including Mackay-Cruise, Ido Leffler, and Marina Go. Leffler has indicated that he would stay on through the merger but retire from the board on 30 June next year.
What they said: “The combination of these two companies brings together the best creators of media content in the country, delivering significant financial and strategic benefits for [Seven] shareholders,” Seven chair Kerry Stokes said in a statement.
“This is an important merger, as the combined company will be better able to serve both metropolitan and regional viewers, listeners, partners and advertisers. It will add strength to each of the combined businesses’ television, audio, and digital and publishing operations across the country.
Southern Cross CEO John Kelly said: “SCA has been a consistent advocate for value accretive media consolidation. We have invested considerable time and resources evaluating and responding to proposals put forward by third parties.
“These proposals proved to be not deliverable. The proposed merger with SWM provides demonstrable benefits to our shareholders, a clear strategic path forward and is deliverable for our shareholders if approved by SWM shareholders.”
The source: ASX announcement
