- Seven West Media (SWM) looks to solidify its position in Australia’s broadcast landscape with the buyout of Prime Media Group (PRT) for $131.9 million
- The purchase price represents a 57 per cent premium to Prime Media’s closing price on Friday, October 29
- Successful completion of the deal is also likely to generate cost synergies of between $5 million and $10 million each year
- The transaction remains subject to approval by the ACCC and Prime Media’s shareholders
- Shares in Seven West Media are up 7.69 per cent to $0.49, while Prime Media Group is up 69.57 per cent to $0.39 at 11:57 am AEDT
Seven West Media (SWM) is looking to solidify its position in Australia’s broadcast landscape with the buyout of Prime Media Group (PRT) for $131.9 million.
Described by Seven West’s Managing Director and CEO James Warburton as “an important step forward for both companies,” the purchase price represents a 57 per cent premium to Prime Media’s closing price on Friday, October 29.
By completion of the transaction, Prime Media is expected to have roughly $10 million in cash on hand, which will be distributed among its shareholders as either capital return or franked dividends.
This means Seven West will only need to fork out $121.9 million for the acquisition.
“The acquisition means SWM will become Australia’s leading commercial premium broadcast, video and news network, with the potential to reach more than 90 per cent of Australia’s population each month,” Mr Warburton said, adding that the deal was also “transformative” for media buyers.
“It means we will be able to give advertisers easy and seamless access via a single platform to capital city and regional markets.”
Seven West said in a statement that the acquisition will unlock the revenue potential of a combined metropolitan and regional audience, and enhance that audience proposition through re-investments in content.
Successful completion of the deal is also likely to generate cost synergies of between $5 million and $10 million each year, which are expected to be realised within the first 12 to 18 months.
“The asset sale removes a number of the near and longer term headwinds facing Prime and crystallises certain cash value,” Prime Media’s Managing Director and CEO Ian Audsley said.
“Importantly, the asset sale price has regard to the strategic nature of Prime’s asset base, with the purchase price currently expected to allow a distribution to Prime shareholders of 36 cents per share, which is a material premium to recent trading prices.”
Prime Media’s major shareholders — WA Chess Investments Pty Ltd, Birketu Pty Ltd, Keybridge Capital Limited, Regal Funds Management and Spheria Asset Management Pty Ltd, which collectively hold 43.5 per cent — have already shown their support for the deal.
Still, completion of the transaction remains subject to approval by the Australian Competition and Consumer Commission (ACCC) and a vote by Prime Media’s shareholders, scheduled for December. Should those conditions be met, the sale is likely to close before the end of this year.
Seven West said it will be funded through a $600 million facility, underwritten by ANZ and Westpac, and has appointed Stanton Road Partners as financial advisor and Herbert Smith Freehills as legal counsel.
Meanwhile, Prime Media has appointed E&P Corporate Advisory as its financial and Allens as its legal advisors.
Shares in Seven West Media are up 7.69 per cent to $0.49, while Prime Media Group is up 69.57 per cent to $0.39 at 11:57 am AEDT.