ARN Media is fighting a decision by a share market regulator which could delay, or derail, its takeover bid for competitor SCA.
The broadcaster is seeking a review of a decision by the Takeovers Panel that found a contravention of takeover rules in the acquisition of shares in target SCA.
“The panel has received an application from ARN Media Limited seeking a review of the panel’s decision in Southern Cross Media Group Limited to make a declaration of unacceptable circumstances," the panel said in a statement.
“A review Panel has not been appointed at this stage and no decision has been made whether to conduct proceedings. The Panel makes no comment on the merits of the application.”
The Takeovers Panel ruled “unacceptable” how ARN acquired shares in SCA from fund manager Allan Gray.
However, ARN and Allan Gray say the contraventions of the rules were “inadvertent”.
The panel is now considering what action to take, which could stop ARN’s bid for SCA for six months.
ARN, backed by private equity firm Anchorage Capital Partners, last month launched a takeover bid for competitor SCA.
SCA shareholders are being offered 94 cents per share. The offer, valuing SCA at $330 million, is made up of 0.753 of an ARN share and 29.6 cents cash for each SCA share.
The breach of the rules goes back to the middle of this year when ARN Media acquired an interest of 14.8%, or 35,505,074 shares, in SCA for $38.3 million.
Then ARN then described the buy as a "strategic equity investment".
Some of those shares were acquired from Allan Gray, which also had a 20.04% holding in ARN.
During the acquisition, fund manager Allan Gray’s voting power in SCA, directly and through its ARN holding, increased to 31.24% from 21.71%.
This is well above the 20% rule. Section 606 of the Corporations Act prohibits the acquisition of a relevant interest in voting shares if a person's voting power increases from under 20% to more than 20%.
Investment and financial services group Keybridge Capital, which complained about the transaction, wants ARN and its associates stopped from acquiring any SCA shares for six months after the sale of the vested shares.
The Takeovers Panel usually orders the divestment of any shares above the 20% limit.
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