Southern Cross Austereo has advised sharholders that it is about to buy WA’s Redwave Media, with RedFM and Spirit AM stations in Broome, Geraldton, Karratha and Port Hedland and Southwest/Bunbury.
The purchase from the Seven West Media Group of $28 million is payable in cash and SCA has told investors that “…the acquisition is expected to be earnings per share accretitive in the current year and to generate a return on invested capital above SCA’s hurdle rate of 8.9%.”
SCA’s CEO, Grant Blackley, says “Redwave Media is a logical acquisition for SCA, which already has Australians largest regional radio network. Combine with our existing operations in Perth and to the south, the acquisition will provide SCA with comprehensive radio coverage in Western Australian and will further expand our reach and connection with local communities.”
At today’s Radio Alive conference, Grant Blackley spoke about the purchase of Redwave Media.
The news comes as the SCA share price has continued to tumble, down to 86.5 cents from $1.17 earlier this week, and with the news that a private equity fund may be looking at SCA as a takeover target.
The Australian is reporting (subscription required) that opportunistic funds, like Oaktree, have been carefully scrutinising the regional radio and television broadcaster since SCA’s profit downgrade on Tuesday.
Seven West Media is divesting itself of the radio stations as part of its merger with Prime Media with Prime Shareholders to recieve 0.4582 SWM shares for each Prime share held.
The merger which has the potential to reach over 90% of Australia’s population each week, will be implemented in early 2020 if it gets approval from shareholders in December this year