Southern Cross Media Group (SCA) and Seven West Media (SWM) have agreed to merge.
The two organisations have entered into a Scheme Implementation Deed (SID) to integrate together their metro and regional, free-to-air TV, audio, streaming, digital and publishing assets.
SWM shareholders will receive 0.1552 SCA shares for every SWM share, which would result in SCA shareholders owning 50.1% and SWM shareholders owning 49.9% of the combined group.
One week ago Sandon Capital Pty Ltd purchased an additional 2.5 million shares in SCA upping their voting power from 10.2 to 11.3%. Sandon Capital is Australian-based activist investment firm who buy shares in companies they perceive as undervalued and underperforming companies to influence their boards to take action. They had executed notices under section 203D of the Corporations Act to SCA in May seeking to remove non-executive directors Heith Mackay-Cruise, Ido Leffler, Carole Campbell and Marina Go at the next general meeting, which is to be held on Monday November 24.
Since Sandon’s pot stirring SCA share prices have substantially improved, closing at 84c yesterday. The 12 month low was nearly half that at 45c.
It is also worth noting that when Sandon upped their voting power and share holding, two other companies, Spheria Asset Management (voting power increased from 11.81 to 13.88%) and Pinnacle Investment Management Group (voting power increased from 9.14 to 10.81%) did the same, on the same day as Sandon, although the ASX release notices were staggered.
SCA Chief Executive John Kelly said, with a subtle dig at previous potential takeovers and sales:
“The SCA Board has carefully considered this transaction and firmly believes that this proposal is in the best interests of the SCA shareholders. We are confident the merger has the potential to create significant value for SCA shareholders.
We are particularly excited about the potential of the combined company’s digital platforms and capabilities which will generate approximately 12% of FY25 revenues and have compelling future growth opportunities.
SCA has been a consistent advocate for value accretive media consolidation. We have invested considerable time and resources evaluating and responding to proposals put forward by third parties.
These proposals proved to be not deliverable. The proposed merger with SWM provides demonstrable benefits to our shareholders, a clear strategic path forward and is deliverable for our shareholders if approved by SWM shareholders.”
The Chairman of SWM, Kerry Stokes AC, said:
“The combination of these two companies brings together the best creators of media content in the country, delivering significant financial and strategic benefits for SWM shareholders.
“This is an important merger, as the combined company will be better able to serve both metropolitan and regional viewers, listeners, partners and advertisers. It will add strength to each of the combined businesses’ television, audio, digital and publishing operations across the country.”
Jeff Howard, Managing Director and CEO of SWM, added:
“This combination marks a pivotal moment for Australian media. By bringing together the complementary assets and brands of SWM and SCA, we are creating a truly national, diversified media organisation with extensive scale and
reach across our free-to-air television, streaming, audio, digital and publishing assets.”
SCA and SWM have agreed that Jeff Howard will be the Managing Director and CEO of the combined group and John Kelly will assume the role of Group Managing Director, Audio. Kerry Stokes AC will assume the role of Chair of the Board of Directors until stepping down from the Board in February 2026 and transitioning the role to Heith Mackay-Cruise.
The combined Board will then be four representatives from the SWM Board (being Teresa Dyson, Jeff Howard, Michael Malone and Ryan Stokes AO) and three representatives from the SCA Board (Heith Mackay-Cruise, Ido Leffler and Marina Go). That is unless the Sandon notice to remove them at the AGM is successful. Ido Leffler has indicated he will retire from the Board on 30 June 2026.
Further details regarding the combined group’s executive team will be agreed at a later stage. Seven West Media still has a 14.9% shareholding in ARN.
Southern Cross Austereo (SXL) shares were up this week due to the dividend payment and continued to increase today and Seven West Media (SWM) shares increased today on news of the merger.
Jen Seyderhelm is a writer, editor and podcaster for Radioinfo.