Takeovers Panel backs Bolton, rules against ARN in Southern Cross bid

afr.com:

ARN Media’s proposed acquisition of Southern Cross Austereo has been dealt a blow, with the Takeovers Panel ruling it improperly acquired a stake in the television and radio broadcaster from fund manager Allan Gray.

ARN bought 14.8 per cent of Southern Cross in June, before launching a bid to acquire its rival alongside private equity player Anchorage Capital last month. But Keybridge Capital’s Nick Bolton, a Southern Cross shareholder, complained to the Takeovers Panel that the June stake was acquired in breach of corporations rules.

Ciaran Davis is the chief executive of ARN Media. James Brickwood

At the time, on June 19, Allan Gray owned 21.71 per cent of Southern Cross.

It also owned 20.04 per cent of ARN. That meant when ARN acquired its stake in Southern Cross, including some from Allan Gray, the fund manager’s voting power in company increased to 31.24 per cent.

The panel found the breach could have an impact on the control of Southern Cross, or any proposed acquisition. That meant 6.83 per cent of Southern Cross shares purchased by ARN were in breach of the law, the Takeovers Panel said in a decision published on Thursday.“The circumstances constitute unacceptable circumstances,” the Takeovers Panel found.

The parties – ARN, Allan Gray, Southern Cross and Keybridge – have until next Wednesday to tell the Takeovers Panel what should happen next.

The ruling is a complication to ARN’s unexpected bid for Southern Cross. The company proposes to divide the assets of between itself and Anchorage. ARN owns KIIS FM – the home of the newly renewed Kyle & Jackie O Show – and the Pure Gold networks. It also owns a regional radio network. Southern Cross, meanwhile, owns the Hit and Triple M radio brands, 96 regional stations