Southern Cross rebuffs Antony Catalano’s merger proposal

Antony Catalano speaking at a Thorney investment presentation in Melbourne . Picture: David Geraghty

Hit and Triple M radio broadcaster Southern Cross Media Group has rejected Antony Catalano’s merger offer.

Mr Catalano made an approach to the Southern Cross board this month to merge the business with his Australian Community Media publishing operation after being encouraged to offer a bid by the regional broadcaster’s advisers following an ARN Media-led buyout approach.

His plan involved vending all of his regional and community newspaper titles into the business, with the exception being the agriculture publishing division, including its title The Land.

In exchange, he would become a holder of up to 20 per cent of shares in Southern Cross Media Group, which he believes would be worth almost 55.6 per cent more when pulled together with his operations and the extra earnings gained.

The company did not see the offer as representing value for Southern Cross shareholders and informed the market after close on Wednesday, saying the offer would require an acquisition of ACM print and digital assets, which was not consistent with its strategy of being “All About Audio”.

Shares in Southern Cross closed up 2.4c to $1.045 with its market value at $245m.

Meanwhile, Southern Cross continues to assess the offer on the table from radio rival KIIS and Pure Gold radio broadcaster ARN Media and private equity firm Anchorage Capital Partners (ACP).

The offer put forward on October 18 includes 29.6c per share of cash from 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.

Institutional fund manager Allan Gray remains the kingmaker.

Yet adding a twist to the takeover battle at the weekend was a move by the Kerry Stokes-chaired Seven West Media Group to amass a 19.9 per cent stake in suitor ARN Media.

Allan Gray sold down a 7.5 per cent holding in ARN after owning close to 20 per cent but retains a holding of close to 20 per cent in Southern Cross.

In 2019, Mr Catalano with his wealthy backer Thorney Investment Group, the private company of Alex Waislitz, raided Prime Media Group when Anchorage Capital Partners and Seven West Media bid for the business.

The Nick Bolton-led Keybridge Capital, of which Mr Catalano is a director, has also applied to the Takeovers Panel on the grounds that ARN Media’s move to buy 14.8 per cent of Southern Cross in June ahead of its bid that was launched in October needed to be accompanied by a takeover bid under takeover laws.

Mr Catalano purchased ACM from Nine Entertainment in 2019 for a price believed to be about $120m.

Since that time, he has built the company’s digital capabilities with 130,000 annual digital subscribers and more than $20m digital revenue from 90 websites with an overall audience of 6.6m.

Among ACM’s 14 daily newspapers are the Newcastle Herald, The Canberra Times, The Bendigo Advertiser, the Illawarra Mercury, The Advocate and the Border Mail.