Takeover target Southern Cross Media Group is being offered more sensitive information about ARN Media and Anchorage Capital Partners’ buyout proposal to determine whether the offer is in its best interest.
The understanding is Southern Cross has now signed a confidentiality agreement to gain more information about ARN Media to understand the offer in more detail.
Southern Cross has previously flagged that the deal is complex and will take some time to understand, but on a broader level, the view in the market is that consolidation is needed in the market at a time revenue growth becomes increasingly more challenging.
New Zealand Media and Entertainment Company NZME told the market on Tuesday that its advertising revenue was down 7 per cent year-on-year in what was further evidence of the tough market conditions.
As a result, it flagged its annual earnings before interest, tax, depreciation and amortisation would come in at the bottom end of guidance between $NZ57m and $NZ59m for 2023.
Southern Cross, which owns the Triple M and Hit radio stations, is yet to respond to the proposal that landed from ARN in October at 91c per share, with the highly complex nature of the deal taking time to assess.
It includes 29.6c per share of cash from private equity firm Anchorage Capital Partners (ACP) and 0.753 ARN shares.
It would result in Southern Cross shareholders owning around one third of the combined entity.
ACP is in the mix to take assets that ARN Media would need to offload to appease media regulators, which forbid a broadcaster having two or more licences in one market.
ACP would have eight metro radio stations, 35 regional stations and the Southern Cross Media television business.
Should the deal proceed, ARN Media would gain the Triple M metropolitan radio network and cede three Gold stations to ACP, which could add 1 per cent to its share of radio audiences, and give up three Gold stations to ACP.
ARN Media would acquire 51 stations and send 10 in the other direction, bringing it to a total of 88 stations, significantly bulking up the regional radio offering.
Southern Cross is advised by UBS, while the bidders are advised by Jefferies.
Southern Cross shares on Tuesday closed at 90c, valuing the business at $216m.
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