ARN Media has had a part win, removing a block by a regulator, in its takeover bid for competitor SCA.
The broadcaster had been ordered to sell down part of its holding in target SCA after being found to be in contravention of takeover rules.
However, a review by the Takeovers Panel reversed an order to vest in corporate regulator ASIC 6.83% of the shares ARN acquired in SCA so they can be sold
The new orders allow ARN to retain its 14.8% holding in SCA subject to certain conditions. This includes voting the shares in favour of a competing scheme of arrangement that is recommended by the majority of SCA directors.
“We are happy with this decision and now look forward to accelerating the engagement with the SCA Board,” said a spokesperson for ARN.
“From what we have seen so far, we believe our proposal is a very compelling proposition for SCA shareholders and, together with (private equity firm) Anchorage, we are committed to finalising a certain proposal in an expedient manner.”
The panel had ruled “unacceptable” how ARN acquired shares in SCA from fund manager Allan Gray.
ARN and Allan Gray say the contraventions of the rules were “inadvertent”.
The breach of the rules goes back to the middle of 2023 when ARN Media acquired an interest of 14.8%, or 35,505,074 shares, in SCA for $38.3 million.
ARN then described the buy as a "strategic equity investment".
Those shares were acquired from Allan Gray, which also had 20.04% of ARN, and others.
As a result of the ARN acquisition, 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%.
ARN, backed by private equity firm Anchorage Capital Partners, in October made a $330 million offer, made up of 0.753 of an ARN share and 29.6 cents cash for each SCA share.
The deal would create two new companies, one controlled by Anchorage and the other becoming a bigger listed entity.
ARN also raised the possibility of a pre-completion fully franked special dividend, expected to give an additional value of 12.7 cents per SCA share.
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.