As rival bidders vie for Southern Cross Media, ARN hits a Corporations Act snag

Media mogul Antony Catalano has received a small win today in Australian Community Media's (ACM) battle for a merger with Southern Cross Media (ASX: SXL), after the Takeovers Panel declared unacceptable circumstances surrounding the voting power of a shareholder in rival bidder ARN Media (ASX: A1N).

Four months before Pure Gold and KIIS FM owner ARN Media launched its Anchorage Capital-supported $225 million takeover bid for Triple M owner Southern Cross Media, which more recently has attracted Seven West Media (ASX: SWM) into the melee, a contrarian investment firm with holdings in both Southern Cross and ARN sold shares from one to the other.

That firm is Allan Gray, which at the time of the transaction on 19 June had a voting power of 21.71 per cent at Southern Cross and 20.04 per cent at ARN.

In a complaint to the Takeovers Panel last month, Keybridge Capital (ASX: KBC), an investment group in which Catalano has a 10.5 per cent holding, submitted that even though Allan Gray announced it had reduced its relevant interest and voting power in Southern Cross from a purported 21.95 per cent to 16.44 per cent, it actually had more power via its stake in ARN.

The Takeovers Panel has today accepted Keybridge's conclusion, noting that Allan Gray's voting power at Southern Cross lifted to 31.24 per cent as a result of the transaction, and is therefore in contravention of the creeping capacity provisions under s606 of the Corporations Act.

While both Allan Gray and ARN claim the contraventions were inadvertent, the Takeovers Panel has declared the circumstances as unacceptable because they could have had or likely will have an influence on the control of Southern Cross.

The Takeovers Panel has called for submissions in relation to the orders by 5pm AEDT on Wednesday, 29 November.

Last week, Allan Gray Australia and its related entities reported another change of interest, claiming that as a result its voting power in Southern Cross had gone down from 16.44 per cent to 11.97 per cent.