Broadcaster ARN Media, backed by private equity firm Anchorage Capital Partners, has launched a takeover bid for competitor SCA.
SCA shareholders are being offered 94 cents per share, a substantial premium to yesterday's closing price of 73 cents.
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 moves to acquire 100% of the company follows ARN Media in July acquiring an interest of 14.8% in SCA for $38.3 million. Then ARN described the buy as a "strategic equity investment".
The deal would see radio and television assets of ARN and SCA separated into independent ownership.
This would create two national media organisations that would compete independently of each other:
- A focused metro radio network of 10 stations across Sydney, Melbourne, Brisbane, Adelaide and Perth, anchored by the KIIS and Triple M brands.
- 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.
ARN Media chairman Hamish McLennan says the board of directors has carefully considered numerous strategic options to continue the company’s growth
"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," he says
"The increased scale supports the potential for future index inclusion and liquidity once the transaction is complete.”
ARN CEO Ciaran Davis says there's 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," he says.
SCA, in a statement to the ASX, advised shareholders to wait.
"The proposal is unsolicited, complex, and highly conditional. SCA recommends shareholders take no action in relation to the Indicative Proposal from ARN and ACP," SCA said..
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 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."
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