Tensions are believed to be building between the board and management teams of Southern Cross Media and its suitor, ARN Media, which has delivered a $9.8m loss for 2023.
The Jefferies-advised ARN Media and Anchorage Capital Partners last year had offered about $239m for regional radio and television broadcaster Southern Cross, in what is a highly complex deal that involves the swapping around of assets between ARN Media and ACP to appease regulators.
Last year, KIIS FM and Gold radio network owner ARN Media was demanding due diligence for Southern Cross Media on an exclusive basis in exchange for the target gaining access to its own sensitive financial information.
The demand was said to be one of the factors holding up Southern Cross, advised by UBS, either recommending or rejecting the cash-and-scrip bid on the table from competitor ARN Media together with Anchorage Capital Partners.
But still the deal is yet to be agreed, and investors in both stocks will be awaiting further news when Southern Cross Media reports its result next week.
Both parties are claiming each side is dragging its feet, although the understanding is that there has been exchanges of information.
But the bid was made in October, and Southern Cross Media is yet to tell shareholders whether or not it rejects the offer.
While delivering its result on Thursday, ARN Media said it had pulled off a strong operational performance in a highly competitive market against a backdrop of reduced advertising spending.
Shares in ARN Media closed up 4c at 94c, while Southern Cross Media shares closed down 2.5c at 98.5c.
The mooted transaction involved ARN Media offering 0.753 shares and ACP offering 29.6c a share cash for Southern Cross, which owns the Triple M and Hit radio stations.
ARN Media has paid top dollar for some of the most highly rated talent in radio broadcasting, with Sydney breakfast duo Kyle Sandilands and Jackie ‘‘O’’ Henderson recently renewing a contract with the broadcaster for 10 years, said to be worth more than $200m.
ARN Media made the Southern Cross Media bid after amassing a 14.8 per cent stake mid-year at $1.08 a share when shares were 72c, and it was worth 91c a share, or 5.5 times EBITDA.
Seven West Media has since bought a 19.9 per cent stake in ARN Media.
ACP is in the mix to take assets that ARN Media would need to offload to appease media regulators that forbid a broadcaster having more than two licences in one market.
ACP would have eight metro radio stations, 35 regional stations and the Southern Cross Media television business.
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