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Radio network giant and regional TV broadcaster Southern Cross Media Group (ASX: SXL) has confirmed a merger bid is on the table from Australian Community Media (ACM), which is prepared to give up its regional publications and digital assets in exchange for a shareholding in the ASX-listed group.
In an announcement to the market, Southern Cross was unable to reveal any financial details of the non-binding indicative conditional proposal from ACM, which is owned by media moguls Antony Catalano and Alex Waislitz.
Former Domain (ASX: DHG) CEO Catalano and Waislitz, via his affiliated entities Thorney Opportunities (ASX: TOP) and Thorney Investment Group, acquired ACM from Nine (ASX: NEC) for $115 million in 2019.
Their media group is Australia's largest independent publishing company with more than 100 brands reaching a reported 4.3 million people each month. At the time of the acquisition its number of titles was three times greater, but after a temporary suspension on print publications in 2020, numerous publications were permanently shut down.
The latest offer not only threatens the "independent" label of Australian Community Media, but it also throws a spanner in the works of an existing merger proposal with Southern Cross from ARN Media (ASX: A1N).
ARN's offer values Southern Cross at $225 million in a deal backed by private equity group Anchorage Capital Partners that would bring together ARN's radio networks such as Pure Gold and KIIS with Southern Cross brands Hit Network, Triple M and LiSTNR.
"SCA will consider ACM’s proposal with its advisers to assess whether it would be in the interests of SCA and its shareholders to pursue ACM’s proposal," the company stated.
"In the meantime, SCA and its advisers are continuing to progress their evaluation of the indicative proposal received on 18 October 2023 from the consortium of ARN Media Limited (ASX: A1N) and Anchorage Capital Partners Pty Limited (ACP)."
Southern Cross has recommended shareholders take no action at this stage.
In early trading, SCA shares were down 2.11 per cent after the announcement at 93 cents per share (cps) and TOP shares remained flat at 45cps.
In an investment update for September, Thorney Opportunities highlighted an ongoing digital transformation for ACM, with continued growth for digital subscription numbers across both regional and agricultural titles.
The Thorney Opportunities fund holds a 25 per cent interest in 20 Cashews Pty Ltd, which is the investment vehicle for Waislitz and Catalano's ownership of ACM. Based on figures provided in TOP's annual report, Australian Community Media would have an estimated fair value of $71.8 million.
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