Seven West Media to takeover Prime Media
Seven West Media CEO James Warburton.
Seven West Media is set to merge with regional television affiliate Prime Media.
If successful, Seven hopes the merger will establish the company as the leading wholly-owned commercial network, with potential to reach over 90 per cent of the population across metro and regional Australia, and the ability to offer a single advertising platform.
The merger is a 100 per cent scrip-based prime scheme of arrangement; that is, where shares are offered in place of cash. It is proposed that Prime shareholders will receive 0.4582 Seven West Media shares for each Prime share that they hold.
Following completion of the transaction, existing Seven West Media shareholders will own 90 per cent of the combined entity, with Prime shareholders holding the remaining 10 per cent.
The move is also designed to help strength Seven’s balance sheet and help lift it out of debt – the network reported a full-year loss of $444.5 million in August. The Prime merger is expected to generate cost synergies of $11 million on an annualised basis and Seven believes there is further potential revenue upside. The costs savings are expected to be realised within 12-18 months from completion of the sale.
Seven said it hopes the merger will also unlock revenue potential of regional audience, allow it reinvest in content and expand digital delivery in regional markets.
The directors of Prime have unanimously recommended that its shareholders vote in favour of the scheme, in the absence of a superior proposal and subject to independent advice. The sale will also be subject court approval and regulatory approval, including ACMA and the ACCC.
The combined business will be led by Seven West Media MD and CEO James Warburton and chaired by Kerry Stokes.
Stokes said: “SWM and Prime have had a longstanding relationship and are key partners in the industry. The combined group will cement our position as Australia’s leading content provider and presents excellent value to shareholders.”
Prime’s chairman John Hartigan said: “The Prime Board has carefully considered the proposed transaction and believes it is in the best interests of Prime shareholders. It represents an exciting opportunity for Prime shareholders to maintain their exposure to the broadcast television industry in a stronger and larger combined group that is more relevant and resilient.”
Warburton said: “The Proposed Transaction is a game changer for advertisers and media buyers and cements SWM’s position as the superior advertising offering. Overnight, SWM will be the leading wholly-owned commercial premium network that amasses a monthly Australian audience reach of 18 million people.”
Seven also announced today that it will sell its Western Australian radio assets, Redwave, to Southern Cross Media for $28 million.
“Through these actions, SWM will have a strengthened balance sheet, lower debt levels and improved efficiency in the delivery of content across a range of metropolitan and regional platforms,” concluded Warburton.