ARN makes bid for rival radio network Southern Cross Austereo

KIIS FM’s owner ARN Media joins forces with a private equity group to lob a $225.5m takeover bid for Southern Cross Austereo, which could see a big shake up of the radio industry.

The radio wars have intensified, with ARN Media and Anchorage Capital Partners lobbing a $225.5m unsolicited takeover bid to buy Southern Cross Austereo.

ARN Media – which owns stations including KIIS FM in Sydney – has joined forces with the private equity firm to make the non-indicative proposal to acquire SCA, which owns the Triple M and Hit Networks.

The move comes just four months after ARN bought a 14.7 per cent stake in SCA for $38.3m and if the non-binding offer is successful, it would bring the female-oriented KIIS network together with the male-oriented Triple M network.

It also comes amid ongoing reports that KIIS FM’s hit Sydney breakfast radio duo of Kyle Sandilands and Jackie ‘O’ Henderson is close to signing a 10-year deal worth more than $200m, however it is understood no new deal with the top-rating duo has been signed yet.

KIIS FM breakfast hosts Jackie "O" Henderson and Kyle Sandilands.

It is likely that their show, which is increasingly trying to shift away from having a Sydney-centric focus – will be broadcast in Melbourne if the deal is signed.

SCA, led by John Kelly who began his role as managing director and CEO on July 1, released an announcement to the ASX on Wednesday and said, “the proposal is unsolicited, complex, and highly conditional. SCA recommends shareholders take no action in relation to the Indicative Proposal from ARN and ACP.”

The proposal to acquire 100 per cent of SCA’s would mean shareholders would receive for each share 0.753 of an ARN share and an additional 29.6 cents in cash.

In SCA’s statement to the ASX, it said its board will consider the indicative proposal.

The company also Grant Samuel as its financial adviser.

Under the current rules, no company than hold more than two commercial radio broadcasting licences within the same licence area.

Under the proposed transaction, the radio and television assets of ARN and SCA are intended to be separated into independent ownership by ARN and ACP.

“The proposed transaction and separation will result in two separate, national media organisations that will compete independently of each other on metro and regional radio,

and more broadly,” ARN’s statement to the ASX said.

The proposal would focus on having a metro radio network of 10 stations in the five major metropolitan cities including Sydney, Melbourne, Brisbane, Adelaide and Brisbane, led by the KIIS and Triple M brands in each location with differentiated national and local talent.

ARN also said it would be “a larger, growing and profitable regional radio footprint comprised of 88 stations up from 47 today, plus full ownership of ARN’s two existing stations in Canberra, delivering a more compelling regional network for advertisers and communities.”

ARN chief executive Ciaran Davis said there is “significant value creation opportunity bringing together certain ARN and SCA radio and digital audio assets.

“ARN is ideally positioned to support and operate an expanded regional radio network and as a combined group of scale in digital audio, positioned to compete efficiently and effectively with international competitors,” he said in a statement.