The Australian government’s Takeovers Panel has ruled on the Sandon Capital request to lift voting restrictions on some shares in SCA.

Those following the matter will remember that:

• the proposed ARN takeover of SCA fell over last year, but that triggered a number of other offers for SCA.
• As the discussion about the company’s share value heated up, another investor, Sandon Capital called for a board spill.
• Sandon wanted to be able to ask ARN to vote its 6.83% of SCA shares in the board spill motion,
• but it transpired that voting rights of those shares were limited due to previous restrictions.
• Meanwhile, SCA finally sold its regional television assets, with the sale finalised yesterday, and will use the proceeds to focus on the company’s audio business.

The next step in the saga has unfolded today, with the Takeovers Panel proposing a staged change in the voting restrictions in its ruling. That is unlikely to please Sandon Capital if it wants to take any immediate action about the board spill.

Sandon Capital sought a variation to permit ARN Media Limited’s 6.83% of SCA shares to be voted on the board spill resolutions, and also asked for “an end date be applied to the general voting restriction so that the Relevant Shares be able to be voted at SCA’s next general meeting.”

The Takeovers Panel “was not persuaded of any material change in circumstances or other reason which would justify varying the existing orders,” but it did go some way to lifting the restrictions in the future, making a variation to the existing orders by:

• inserting a new Order 5A which provides that at the end of each 6-month period after the variation date Order 1 ceases to apply in relation to the number of Relevant Shares equal to 3% voting power in SCA (in recognition of the rights under the ‘creep rule’ in item 9 of section 611) and

• amending Order 5 such that the orders cease to apply once Order 1 has no application as a result of the new Order 5A.

What does all that mean?

It means that the restrictions will be progressively lifted on 3% of shares, every six months, until there are no more restrictions left. The order also allows that the change will be null and void if “ARN or any of its associates obtain voting power of 100% in Southern Cross,” in other words, if ARN somehow takes over SCA in the next couple of years.

This will not help Sandon Capital to use those votes in any immediate board spill motion, nor in any vote at the company’s AGM. SCA is on the record as having already gained guarantees of support from most of its other major shareholders, who presumably would not support any Sandon motion.

In a statement to the stock exchange today, Southern Cross Austereo (SXL) said the company is “pleased that the proceedings haveb now been resolved and continues to remain focused on its business and moving forward with its ‘All About Audio’ strategy.”

SCA’s latest trading update, issued yesterday, says audio revenues are “up approximately 5% on the prior year,” driven by growth in market share and federal election revenue. The company expects next quarter revenue to be in line with the approx 5% growth achieved in the 2025 financial year, which ended this week.

Now that the ’25 financial year is over and the immediate effect of the Sandon is, at least temporarily, neutralised, SCA’s immediate corporate future looks steady. ARN is also continuing to earn consistent revenue with its own audio first strategy, but its share price has taken a hit, and is now trading below the 50 cents per share range. SCA is trading at about 54 cents per share on today’s share price.

Both companies could be considered undervalued in stock market terms, particularly ARN.

Will we see some new takeover activity now that they new financial year has begun? After buying SCA’s regional tv assets, would 7West Media be interested in acquiring ARN, especially since ARN has recently reduced its operational costs with a round of redundancies? Only time will tell.

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