ARN Media (ASX:A1N) still harbors ambitions for control of Southern Cross Austereo (SCA), even though it lost its partner, private equity group Anchorage Capital, in its bid.
ARN, whose major shareholders include News Corp and Seven West Media, confirmed the departure of Anchorage Capital Partners from the deal but indicated it was considering pursuing the bid independently.
Southern Cross shares were down more than 6% at 11 am, trading at 88 cents, compared to Friday’s close at 94 cents, reflecting diminished prospects for a bid.
ARN shares were down more than 5% at 80 cents on Monday, as investors expressed discontent that the company still seeks to acquire SCA.
According to an ASX update from ARN on Monday morning, Anchorage “notified ARN of its withdrawal from the Consortium” after conducting due diligence with Southern Cross.
“Given the continued decline in the trading performance of Regional TV since the Consortium Proposal was made in October 2023, the further deteriorating outlook for Regional TV, and SCA’s existing long-term contractual obligation for outsourced TV broadcast transmission, it does not support ACP’s Regional TV investment thesis,” ARN’s update read.
“As a result, the Consortium must withdraw the Consortium Proposal. ARN thanks ACP for its constructive engagement as a Consortium partner and recognizes the considerable investment of time and resources that ACP has made over the last seven months.”
ARN stated that in light of Anchorage’s decision to exit the consortium, it “intends to engage with SCA on a revised non-binding indicative proposal.”
ARN Media mentioned it is still considering acquiring certain radio assets held by Southern Cross Media, as well as potentially combining their digital audio assets through an indicative proposal.
This would entail Southern Cross’ shareholders receiving 0.870 ARN ordinary shares for each fully diluted Southern Cross share.
The ‘New SCA’ would possess a national network of 44 radio stations, including five HIT and three Gold-branded metro stations and 36 regional radio stations.
Southern Cross shareholders would also retain their shareholding in the company or receive their equivalent shareholding in a newly listed de-merged entity, the filing stated.
In a separate statement, SCA expressed disappointment that the Consortium had withdrawn its proposal.
“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,” SCA chair, Heith Mackay-Cruise, said in the statement.
“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.”