Bankers pull back curtain on mystery plan to reshape the radio market
It was a sudden share raid that at the time made no sense in Australian media circles. ASX-listed media company ARN Media, with Jefferies at its side, quickly bought up 14.8 per cent of its arch rival Southern Cross Austereo in June this year.
ARN overpaid, forking out $38 million or $1.08 a share – a 42 per cent premium – for shares that have since tumbled even lower. Lacking clear answers, the market speculated and competitors briefed against the move.
ARN, which owns the KIIS and Pure Gold networks, couldn’t mount a takeover – media ownership laws prevented one company owning more than two radio licences in any one city. Was it an expensive corporate move to stop the high-rating Kyle and Jackie O Show jumping ship? ARN boss Ciaran Davis insisted the shares were just good value.
Now, finally, the share raid makes more sense.
ARN Media chairman Hamish McLennan and CEO Ciaran Davis.
First reported by The Australian Financial Review’s Street Talk team on Tuesday evening, ARN Media chairman Hamish McLennan and Mr Davis had been hatching a stunning plan to partner with private equity firm Anchorage Capital Partners and fundamentally reshape Australia’s radio landscape. The plan is to grow considerably, stripping SCA, and giving Anchorage – a partner and soon to be competitor – a group of assets it could run for cash or sell for parts.
On Wednesday, ARN and Anchorage, advised by Jefferies and Gilbert+Tobin, offered SCA shareholders a deal of cash and scrip – 0.753 ARN shares for each SCA share, plus 29.6 cents, plus franking credits of 12.7 cents a share. The offer is a 29 per cent premium on the current trading price. Analysts liked what they saw.
Anchorage would fund the cash component, while ARN would issue new shares
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