Seven West Media (ASX: SWM) is shoring up its position in a potential shake up of Australia’s media industry after paying well above the market to secure a 19.9 per cent stake in KIIS FM owner ARN Media (ASX: A1N).
While Seven West has ruled out a takeover of ARN Media, the company says it has taken a strategic position in the company with which it has ‘existing and long-standing commercial partnerships’ to ensure its ‘continued and long-term success via a direct investment’.
The move comes in the wake of ARN Media last month launching a $225 million takeover bid for Triple M owner Southern Cross Media Group (ASX: SXL), in a move that aims to split the combined group’s radio and television assets.
However, the bid for Southern Cross hit a snag last Friday with the Triple M owner announcing it had received an unsolicited second bid, described as a conditional non-binding indicative proposal, from Australian Community Media (ACM).
The latest proposal is aimed at merging Sothern Cross Media with the regional publications and digital assets of ACM, Australia’s largest independent publishing group with newspapers in key regional cities as well as flagship rural publications such as The Land and Queensland Country Life.
Seven West this morning announced it had forked out $50.1 million for the 14.9 per cent stake in APN Media at $1.10 per share – or a 31 per cent premium to last Friday’s closing price of 84c. The company describes the move as a ‘strategic equity investment in the media sector’.
Seven West separately entered a cash-settled equity swap with Barrenjoey Markets to acquire a further 5 per cent of the company.
While Seven West affirms it has no intention of launching a takeover for either APN Media or Southern Cross Media, it does indicate that it will consider its position should an ‘alternative control proposal’ emerge for APN Media.
“Seven West Media has a disciplined approach to value creation in the media sector,” says Seven West chairman Kerry Stokes.
“We believe that this strategic holding presents strong value for our shareholders in light of sector consolidation activity.”
Seven West also notes that it is ‘supportive’ of APN Media’s current business direction.
“SWM’s objective is to be Australia’s most connected news, sport and entertainment brand,” says Seven West’s CEO James Warburton.
“Our investment in A1N aligns with our strategic pillar of partnering for growth, and we look forward to continued collaboration across our two companies.”
ARN Media shares surged as much as 13 per cent to 95c in early trading this morning, before settling back to 92c at 10.28am (AEDT).
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