Seven West Media (SWM) Limited has announced that it has acquired a 14.9 per cent shareholding in ARN Media Limited as a strategic equity investment in the media sector. SWM has also entered into a cash-settled equity swap with Barrenjoey Markets Pty Limited relating to a further five per cent of ARN.
SWM has existing and long-standing commercial partnerships with ARN and has an interest in ensuring their continued and long-term success via a direct investment in ARN.
SWM is aware of the recent ASX announcements regarding non-binding indicative proposals involving ARN and others around consolidation in the sector, including developments over the last several days. SWM is supportive of ARN’s current business direction. SWM has no intention of launching a takeoverfor ARN (in the absence of an alternative control proposal) or Southern Cross Media Group Limited.
SWM Chairman, Kerry Stokes, said: “Seven West Media has a disciplined approach to value creation in the media sector. We believe that thisstrategic holding presents strong value for our shareholders in light of sector consolidation activity.”
SWM acquired the shares at $1.10 per ARN share. SWM spent approximately $50.1 million in acquiring the 14.9 per cent shareholding and has prefunded the swap on an equivalent pricing basis. SWM will lodge the ASIC Form 603 “Notice of Initial Substantial Shareholding”.
The share purchase and swap pre-funding will lift SWM’s pro-forma FY23 leverage from 0.9x (net debt / EBITDA) to approximately 1.15x. To the extentcurrent advertising market conditions result in SWM leverage being above the target 1.0-1.5x band at the end of December 2023, the recently announced $60 million in cost initiatives would be expected to bring leverage back within the target range within a short period of time.
SWM managing director and CEO, James Warburton, said: “SWM’s objective is to be Australia’s most connected news, sport and entertainment brand. Our investment in ARN aligns with our strategic pillar of partnering for growth, and we look forward to continued collaboration across our two companies.”
