Seven West Media has taken a 14.9% stake in Prime Media after its proposed merger in the regional broacaster was blocked by two major shareholders.
Billionaire Bruce Gordon and regional newspaper player Antony Catalano, who between them own 26.16% of Prime, voted against a scheme of arrangement which was then cancelled by Seven and Prime.
However, Seven moved quickly to take the maximum holding, 14.9%, without making a full takeover bid for Prime.
The purchase of 54,594,367 shares in Prime from Spheria Asset Management was done with the issue of 30 million Seven shares.
At the latest share price of $0.33, Seven paid the equivalent of $9.9 million. Seven West's market capitalisation is $505.2 million.
“While we’re disappointed with the outcome of today’s vote, we remain committed to Prime. As Prime itself has said, the business is under pressure to meet regional Australia’s needs and today’s outcome is an unfortunate result for them and their shareholders," says Seven CEO James Warburton.
“We’ve taken a 14.9% stake in Prime today through the issue of 30 million SWM shares to provide stability for the business, to support regional Australia and regional news.
“We look forward to continuing our longstanding relationship with Prime, delivering outstanding content for them in 2020. We appreciate the cooperation and support of Prime’s Board and management throughout this process.”
Under the merger deal, Prime shareholders would have received 0.4582 Seven West Media shares for each Prime share they hold. Existing Seven West shareholders would have ended up with 90% of the combined entity, with Prime shareholders the remaining 10%.
Warburton at Seven West had wanted Prime so he could create a premium broadcast, video and news network with potential to reach more than 90% of Australia’s population each month.
Prime now says it will concentrate on paying down debt as the regional broadcaster faces a continuing weak advertising market.
Prime shares were down 5% to $0.175 today, giving the company a market capitalisation of about $67.8 million.
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