Spheria hopes media rivals’ directors will agree to sale

Southern Cross has rejected the ARN Media offer.

The media and telecommunication sector is currently the stage for high drama, with Appen’s share price on a wild ride as ARN Media shareholders turn up the heat on Southern Cross Media Group.

First with respect to Southern Cross, takeover talks between the radio and television broadcaster and its rival, ARN Media, have been unfolding for months and there’s shareholders who own sizeable stakes in both stocks.

Their hope is that a merged group will generate huge earnings benefits through cost reductions and creating a more powerful radio broadcaster.

But Southern Cross has rejected the ARN Media offer, and now Spheria Asset Management is calling a meeting to dump Southern Cross chairman Rob Murray.

Spheria holds 9.89 per cent, and ARN can vote up to 8 per cent of its stake, and it’s believed to have the support of a number of other large shareholders, potentially giving it support from around 40 per cent of the register.

Usually, not all shareholders turn up for the vote, so it has a strong chance of getting over 50 per cent, and if that’s the case, it could put its own directors into the company in a move that could outfox ARN Media’s target.

Yet any deal would still require an independent committee to assess the merits of the ARN deal.

Spheria’s hope is now that Southern Cross directors and ARN Media directors will come to the table in the meantime and agree to a sale.

Meanwhile, Appen resumed trading on Wednesday after it was forced into a trading halt on the back of a surge in its share price.

Much of that was short sellers covering positions, but investors still had high hopes that adviser Barrenjoey had found a buyer for the data company at a respectable price.

Appen shares collapsed more than 10 per cent on Wednesday when it said an indicative proposal it received from New Jersey-based Innodata in the United States was at 70c a share in a scrip offer – lower than the 96.5c it closed at on Wednesday or $237m on a market value basis.

But on the back of the news that Innodata put forward an indicative proposal, Innodata’s shares plunged 16 per cent, suggesting its shareholders are unhappy about an acquisition.

Innodata is currently at the centre of a class action and is carrying out due diligence on Appen.

A lot is resting on finding a buyer for Appen, which has over time relied on Facebook owner Meta for its contracts.

Its challenge is that it has lost a major contract with Google, and with it still receiving revenue from that contract, it is only breaking even.

Appen operates in the crowded artificial intelligence space and technology advancements creates the threat that its expertise are no longer as strongly sought after.