ACCC approves SCA and Seven merger
Jeff Howard addresses the crowd at the Seven Upfront
Competition watchdog the ACCC has approved the proposed merger of Southern Cross Austereo (SCA) and Seven West Media (SWM).
SCA released a short statement to the ASX this morning stating the ACCC had given “informal clearance” to the merger.
The deal was first floated by the media companies in late September, and involves SCA shareholders acquiring Seven’s shares. SCA shareholders will end up with 50.1% of the new company, Seven shareholders 49.9%, and SCA will be the surviving company on the ASX.
“The ACCC’s approval represents satisfaction of a condition precedent of the transaction and confirms that the merger will not substantially lessen competition,” SCA’s statement said.
“Completion of the transaction remains subject to additional remaining conditions precedent including SWM shareholder approval and approval from the Australian Communications and Media Authority (ACMA).”
The merged entity — name not yet revealed — will be led by current Seven CEO Jeff Howard, with current SCA boss John Kelly heading up the audio division. Current SCA chair Heith Mackay-Cruise will be chair after a short transitional stint by Seven’s Kerry Stokes, and the board will be stacked in Seven’s favour 4:3.
The merging companies are looking for between $25m and $30m in cost savings, a number that was approved, along with the rest of the deal, by an independent expert analysing its benefits for SCA shareholders.
The proposed merger has been the subject of some SCA investor disquiet. While it must be approved by SWM shareholders, SCA’s shareholders did not get to vote on a proposal that will naturally dilute their influence on the merged entity. This led activist investor Sandon Capital — which was already trying to roll SCA’s board — to protest.
