Radio wars: ARN makes shock bid for SCA

ARN Media – home to stations including the KIIS network, iHeartRadio and CADA – alongside private equity firm, Anchorage Capital Partners, has today made a non-binding indicative offer to acquire 100% of the fully diluted share capital of rival radio competitor, Southern Cross Austereo.

In a statement released on Wednesday morning, it was confirmed that the intention is for the radio and television assets of ARN and SCA to be separated into independent ownership by each of ARN and Anchorage, which would then result in “two separate, national media organisations that will compete independently of each other on metro and regional radio, and more broadly.”

The move would see a “focused” metro radio network of 10 stations across Sydney, Melbourne, Brisbane, Adelaide and Perth – each city featuring a KIIS and Triple M brand – and an aim to increase its regional radio footprint from 47 to 88 stations.

Under the proposal, SCA shareholders would receive 0.753 ARN shares and 29.6 cents cash per SCA share.

“The board has carefully considered numerous strategic options to continue the company’s growth and believe this transaction would be transformative for both sets of shareholders,” ARN media chairman, Hamish McLennan said in a statement.

“ARN’s regional radio footprint would be almost doubled while we would maintain a focused metro radio network, underpinned by the recognised KIIS and Triple M brands in metro areas. The increased scale supports the potential for future index inclusion and liquidity once the transaction is complete.”

ARN CEO and managing director, Ciaran Davis, added: “There is a significant value creation opportunity bringing together certain ARN and SCA radio and digital audio assets. ARN is ideally positioned to support and operate an expanded regional radio network and as a combined group of scale in digital audio, positioned to compete efficiently and effectively with international competitors.”

In its own statement issued on Wednesday, SCA confirmed that it had received the offer, calling it a “unsolicited, complex and highly conditional”.

“The Indicative Proposal is subject to the unanimous recommendation of the SCA Board, due diligence, shareholder and regulatory approvals from both the ACCC and ACMA, and other terms and conditions,” SCA’s statement reads.

“The Board of SCA will consider the Indicative Proposal and has appointed Grant Samuel as its financial adviser and Corrs Chambers Westgarth as its legal adviser to help assess the Indicative Proposal. SCA will update shareholders as required.”

The news comes only months after ARN took 14.7% from SCA’s shareholder register, while ARN’s golden geese, Kyle Sandilands and Jackie O Henderson, were reportedly in talks with SCA about a move back to the network that they left in 2013.

The breakfast duo made the move from 2DayFM to KIIS in 2014 which resulted in a share price slide for SCA and more than $100m wiped off its market capitalisation over two days.

Sandilands and Henderson are expected to finalise a deal, speculated to be worth around $200 million over ten years, by the end of the year.

Mumbrella has contacted ARN, SCA and Anchorage for further comment.

More to come.


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