Southern Cross board calls on Allan Gray to withdraw ‘violent’ comments
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The news: The Southern Cross Austereo board has called on Allan Gray managing director Simon Mawhinney to withdraw comments saying its directors should be “lined up and shot” for agreeing to merge with Seven West Media without a shareholder vote.
The context: In comments made to the Financial Review, Mahwinney said that the boards of companies like Southern Cross fail shareholders by striking deals involving nearly half of the company without first consulting their shareholders.
The Southern Cross board, in a statement on Wednesday, said there is no place in corporate scenarios for “extreme and violent metaphors”. The company said the language showed poor judgement and bad taste, and called for them to be withdrawn.
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.
Mahwinney, a former Southern Cross shareholder, was one of two vocal critics of the agreement announced on Tuesday, alongside Gabriel Radzyminski’s Sandon Capital, which owns about 8% of the audio company.
Sandon wrote to Southern Cross late on Tuesday proposing a constitutional amendment restricting Southern Cross from issuing more than 25% of its shares without shareholder approval.
On Wednesday, Southern Cross confirmed receipt of the letter in an announcement to the market. However, Southern Cross said it had secured the support of Thorney Investment Group and Spheria Asset Management, which combined own more than 25% of the company, scuppering the move.
What they said: “SCA is pleased with the response from major shareholders which have expressed strong support for the transaction and have indicated they do not support any proposal that would constrain the company’s ability to issue shares as consideration for the merger with SWM,” Southern Cross chair Heith Mackay-Cruise said in the statement.
“The proposed merger of SCA and SWM has compelling strategic and financial merit and provides a pathway to growth while achieving our long-stated ambition of supporting consolidation in the media sector.
“The SCA board and management will remain focused on the implementation of the merger and the delivery of its significant opportunities for the benefit of all SCA shareholders.”
The sources: Southern Cross statement, ASX statement, Allan Gray statement
