Stokes’ Seven Network merges with WesTrac Holdings
Kerry Stokes’ Seven Network has surprised the market by this morning revealing a merger with resource machinery company WesTrac Holdings.
In an announcement to the ASX, the company announced:
“Seven Network Limited and WesTrac Holdings to merge to create a new diversified operating and investment group to be listed on the Australian Securities Exchange.
“The new company – Seven Group Holdings Limited – will transition Seven Network Limited from an investment holding company with a significant presence in media, to part of an operating group with diversity, scale and strong growth prospects.
“The new company delivers shareholders a company with a market-leading presence in media and the resource services sector, as well as an expanding business presence in China.”
The new company will own 47% of Seven Media Group, which includes the Seven TV network, Pacific Magazines and Yahoo7. Investment company Kohlberg Kravis Roberts will continue to hold the rest.
Stokes’ other media interests including 23% of West Australian Newspapers and 22% of Foxtel part-owner Consolidated Media Holdings are also included in the deal along with the company’s other media interests.
WesTrac is best known as the owner of the Caterpillar construction machinery franchise in most of Australia and parts of China. Stokes was already a major investor in that company.
Stokes said:
“Seven and WesTrac Group are two great companies. Both are performing strongly and both have terrific opportunities for growth. We have had a long and proud association with both companies, which are both leaders in their respective areas, with what I consider the best management teams in the country.
“Since the deal to create SMG, Seven has evolved into an investment holding company with strong media platforms and the financial capacity to expand into new sectors. We are excited about the potential opportunity this transaction has to transform Seven, and about the growth opportunity for all Seven shareholders.”
In its rationale for the deal the company said: “The transaction substantially repositions Seven from an investment holding company to part of a diversified operating group owning market leading businesses with attractive growth outlooks, while retaining full upside to existing strategic investments.”
The deal is a 33% premium on Seven’s current share price.
Meanwhile, Seven’s revenue for the second half of 2009 was $44m, down 40% on the same period 12 months before. The company’s profits after tax were down by a similar percentage.
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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Is this related to Stokes’ other company, Iron Ore Holdings? It makes some sort of insane sense – earthmoving and mining equipment to dig up the iron ore and a radio, newspaper, online and television network to spruik it to the potential investors. All he needs now is a railway company to transport the ore…oopps, I think I just gave away his long term plan.
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It’s all about leverage in China with media.
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