ARN Media proposal to acquire SCA
ARN Media Limited and Anchorage Capital Partners Pty Limited have today made a non-binding indicative offer to acquire 100% of the fully diluted share capital of Southern Cross Media.
Under the Indicative Proposal, SCA shareholders would receive 0.753 ARN shares and 29.6 cents cash per SCA share. Based on the last closing price of ARN shares (A$0.855 on 17 October 2023), this implies a total value of A$0.940 per SCA share before taking into account the benefit of any franking credits distributed in connection with the Proposed Transaction.
The Consortium believes that the Indicative Proposal will provide SCA shareholders with a number of important benefits.
As part of the Proposed Transaction, it is intended for the radio and television assets of ARN and SCA to be separated into independent ownership by each of ARN and ACP, subject to all necessary regulatory approvals. The Proposed Transaction and Separation will result in two separate, national media organisations that will compete independently of each other on metro and regional radio, and more broadly. By structuring the Proposed Transaction and Separation in the manner set out in the Indicative Proposal, the Consortium is confident of delivering transaction certainty to SCA, its shareholders, and other key stakeholders.
For both ARN and SCA shareholders, the Proposed Transaction and Separation will create:
*A focused metro radio network of 10 stations across Sydney, Melbourne, Brisbane, Adelaide and Perth, anchored by the KIIS and Triple M brands in each of these locations and with differentiated, nationally and locally relevant talent
*A larger, growing and profitable regional radio footprint comprised of 88 stations up from 47 today, plus full ownership of ARN’s two existing stations in Canberra, delivering a more compelling regional network for advertisers and communities
*The opportunity to benefit from cost and other efficiencies resulting from the combination of retained and acquired radio stations, under the management of ARN’s well regarded and cost focussed management team
*Enhanced future growth potential and an accelerated path to profitability through a proposed digital audio joint venture of greater scale, allowing ARN to compete more effectively with global digital platforms.
In addition, the Proposed Transaction is expected to deliver at least double digit pro forma earnings accretion for existing ARN shareholders in the year of acquisition.
ARN Media Chairman, Hamish McLennan says “The Board has carefully considered numerous strategic options to continue the company’s growth and believe this transaction would be transformative for both sets of shareholders. ARN’s regional radio footprint would be almost doubled while we would maintain a focused metro radio network, underpinned by the recognised KIIS and Triple M brands in metro areas. The increased scale supports the potential for future index inclusion and liquidity once the transaction is complete.”
ARN CEO and Managing Director Ciaran Davis says “There is a significant value creation opportunity bringing together certain ARN and SCA radio and digital audio assets. ARN is ideally positioned to support and operate an expanded regional radio network and as a combined group of scale in digital audio, positioned to compete efficiently and effectively with international competitors.”
In its statement, Southern Cross Media Group Limited confirms the proposal.
SCA says the proposal is unsolicited, complex, and highly conditional.
“The Indicative Proposal is subject to the unanimous recommendation of the SCA Board, due diligence, shareholder and regulatory approvals from both the ACCC and ACMA, and other terms and conditions,” the statement reads.
“The Board of SCA will consider the Indicative Proposal and has appointed Grant Samuel as its financial adviser and Corrs Chambers Westgarth as its legal adviser to help assess the Indicative Proposal. SCA will update shareholders as required.”