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SCA knocks back latest ARN takeover proposal: ‘Provides downside for shareholders’

Southern Cross Austereo (SCA) announced on Wednesday that it has knocked back ARN Media’s revised takeover bid.Under a new proposal, ARN would acquire the same radio assets as before, plus assume 100% ownership of the combined digital audio assets of ARN and SCA.

SCA shareholders would receive up to 0.870 ARN ordinary shares for each fully diluted SCA share, plus would retain their shareholding in SCA, or receive their equivalent shareholding in a newly listed demerged entity that would hold the radio and television assets previously expected to be acquired by ACP under the Consortium Proposal.

However, SCA confirmed in an ASX statement that it will not proceed with the revised offer, saying it would “involve significant costs to break up SCA’s highly networked and integrated audio platform”.

“The alternative proposal provides downside for SCA shareholders, even if the execution challenges could be overcome,” chair Heith Mackay-Cruise said.

“SCA is Australia’s largest commercial radio and fastest growing digital audio business. Under the alternative proposal, SCA shareholders would be left with a minority interest in an expanded ARN business and full ownership of sub-scale commercial radio assets and declining regional television assets, with limited exposure to the fastest growing media sector of digital audio, and with no cash in return.

“Over seven months of engagement, the Consortium was unable to deliver its original proposal in an executable form. The SCA Board does not believe transferring that complexity, value and execution risk to SCA shareholders is in their best interests.”

SCA recommends “shareholders take no further action in relation to the Alternative Indicative Proposal”.

The news comes after Anchorage Capital Partners pulled out of the bid on Monday “in light of a continued decline in the trading performance of Regional TV” since the bid was first put forward in October last year.

Shortly after, Mackay-Cruise slammed the announcement.

“Over the past seven months, SCA’s management team and advisers have worked diligently and collaboratively with the Consortium to evaluate the Consortium’s proposal and to enable the Consortium to substantially complete its due diligence,” he said in a statement on Monday.

“This has required considerable cost and management effort by SCA. It is frustrating that the Consortium has now withdrawn its proposal in circumstances where any potential material concerns should have been identified much earlier in the process.

It seemed like the takeover was closing in when Rob Murray moved forward his planned retirement in March shortly after ARN upped its bid.

Mumbrella has approached ARN for a response.

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