Bauer chief determined to proceed with $40m Pac Mags deal with Seven

Bauer Media remains "100 per cent" committed to its $40 million purchase of Seven West Media's Pacific Magazines, despite private equity firm Mercury Capital abandoning plans to buy the German publisher’s Australian arm.

Brendon Hill, the local chief executive of Bauer which owns magazine titles including Australian Women's Weekly and Woman's Day, dismissed speculation Mercury Capital's decision to walk away from takeover talks would affect its planned acquisition of Pacific. "It was completely separate," Mr Hill said. "We both are 100 per cent committed to this deal being approved."

Bauer chief Brendon Hill.Credit: Jacky Ghossien

Mercury Capital emerged as the likely suitor for Bauer last year in a deal expected to be worth $150 million. Three weeks prior Bauer announced plans to buy Seven's Pacific, publisher of New Idea, Who and Better Homes and Gardens.

But this week Mercury confirmed it had walked away from talks with Bauer. The failed discussions come a month after the competition regulator released a 'statement of issues' relating to the Bauer and Pacific merger.

Industry sources suggested Mercury Capital's interest in Bauer Media was dependent on the Pacific deal going ahead. Mr Hill said he was "not aware" of any other firms interested in Bauer.

"This [Bauer and Pacific] deal needs to go through for the industry," Mr Hill told The Sydney Morning Herald and The Age. "We are fully 100 per cent gunning for that to be a 'yes' come April. We were expecting them to have a statement of issues in December, so it wasn’t surprising to anyone that they did put that out."

In its statement of issues, the Australian Competition and Consumer Commission raised concerns about the tie-up of direct rivals and issues around reducing competition for suppliers of content.

Mr Hill said the concerns were "ironic". “The ACCC says that New Idea and Woman’s Day are a market. How can that be a market?" he said. “The irony of the decisions around 'we must close magazines or put prices up' ... they are all counter-intuitive to why we are doing this deal - to keep the magazines going ... and to improve them.”

Bauer Media and Pacific Magazines have already moved ahead with post-merger plans, which were in place to proceed after the ACCC's initial decision date on December 19.

Executives at Pacific Magazines including Louisa Hatfield, Nicole Bence, Will Everitt and Lucy Chesterton were informed they would not be transitioning into the new business, while chief executive Gereurd Roberts was appointed Seven's new chief digital officer at the end of last year.

The decision to inform staff of their future roles before Christmas was to provide "surety", Mr Hill said. "That all still stands, it is just waiting on the ACCC announcement," he added.

Mr Hill declined to comment on whether Bauer and Seven West Media would appeal a decision by the ACCC, but assured there were "other options" should it be blocked.

"Either way, there are opportunities for us to work together in various ways moving forward. But I’m 99 per cent sure this is going to get through," he said.

"Seven is committed to securing ACCC approval which is a pre-condition of the current agreement with Bauer and is cooperating with Bauer to do that," a Seven spokesman added.

Bauer Media's local business is formed by what was once ACP Magazines, which it bought from Nine Entertainment for $525 million in 2012. Nine is the owner of this masthead.

Seven West Media had separately planned to acquire Prime Media Group late last year, however that deal was rejected by shareholders including Antony Catalano and Bruce Gordon.