ARN ups SCA takeover offer after rejection
ARN Media has upped its offer to take over Southern Cross Austereo (SCA) just a week after the network rejected the takeover bid.
In its proposal last October, the offer would have seen SCA shareholders receive 0.753 ARN shares and 29.6 cents cash per SCA share. However, in an ASX listing issued on Friday, ARN said it is now willing to increase that “to up to 0.870 ARN shares per fully diluted SCA share”.
Last Thursday, SCA knocked back the bid – which would see ARN, alongside Anchorage Capital Partners, create a “focused” metro radio network of 10 stations across Sydney, Melbourne, Brisbane, Adelaide and Perth with each city featuring a KIIS and Triple M brand – with the board saying that “the current terms of the Indicative Proposal undervalue SCA and, as a result, the Indicative Proposal is not in the best interests of SCA shareholders”.
In response to the rejection, ARN issued its own statement on Friday: “The Consortium disagrees with this assessment and continues to see the Proposed Transaction as a unique opportunity for SCA and ARN shareholders to unlock immediate and long-term value creation in broadcast radio and digital audio, with SCA shareholders also realising significant cash proceeds and gaining potential access to franking credits.
“Since the Indicative Proposal was made, the quality and composition of SCA earnings has changed. Revenue has declined in SCA’s broadcast radio and television operations, and there has been a reduction in 1H FY24 reported EBITDA relative to 1H FY23A and broker consensus estimates. This is being offset by a significant cost-out program that is yet to be independently reviewed by the Consortium’s due diligence advisers.”
ARN Media made a bid to buy rival SCA
It comes only weeks after CEO John Kelly spoke to Mumbrella, who said at the time that there was no certainty that the deal would go ahead.
“This is an incredibly complex transaction in that, if it was just a cash offer, then all we’d be considering is that cash offer versus the value of our business,” Kelly told Mumbrella.
“It’s not. It’s a cash offer of 30 cents, plus 0.753 per share, in a brand new entity which is ARN Newco, which is KIIS MMM and a digital JV which is not even in place yet. So we need to understand what the consortium views, in terms of the earnings profile, the assumptions for that earnings profile moving forward, so we actually can appropriately value the company.”
In a separate conversation, ARN chief Ciaran Davis told Mumbrella he believed that the offer was “eminently executable” and hoped to finalise the takeover by the end of March.
Mumbrella has contacted ARN for further comment.
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Neil Griffiths is the Managing Editor of Mumbrella. He joined the company in October 2023.
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It must have been a shock for ARN when the initial rejection note came through.
ARN has paid overs for Kyle and Jackie, and now it looks like they will pay some massive overs to remove the eyes from SCA. I wonder if they are going to say that they are going to buy out Spotify next.
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