Seven’s Prime Media offer too low: Catalano

Regional media proprietor Antony Catalano called on Seven West to raise its $63m offer for Prime Media.

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

Regional media proprietor Antony Catalano has described Seven West Media’s $63m merger play for Prime Media as not “far off the mark”, but has called on Seven to slightly increase its bid to make it “both fair and reasonable”.

Mr Catalano and his billionaire business partner Alex Waislitz have increased their stake in Prime, which hosts its annual meeting in Sydney today, to more than 13 per cent and have been agitating for Prime shareholders to reject the Seven bid, which values the regional television business at slightly less than 18c per share.

The duo say they hope their Australian Community Media can potentially share resources or strike business partnerships with Prime or Seven across regional centres, with Mr Catalano calling on Seven to consider at least a slight sweetening of the transaction.

“We have been investing in Prime since February this year. We believe it was good value at 24c and we continued to buy down at below 18c as the share price fell because we felt it was an undervalued asset,” Mr Catalano told The Australian at the annual meeting for Mr Waislitz’s two listed investment companies in Melbourne on Wednesday.

“It was with a view that we wanted to broaden ACM into a multimedia company, that was our intention in moving onto the register from February onwards.”

Seven’s bid was described as “not fair” but a “reasonable” transaction by an independent expert commissioned to assess the $63m deal, in a scheme booklet sent to shareholders late last week.

Lonergan, Edwards & Associates said the deal was in the best interests of Prime shareholders in the absence of a better offer, which Mr Catalano said was disappointing.

“I don’t think (the Seven bid) is far off the mark, but it would very fair and reasonable of Seven to come back with a fair and reasonable offer.

“The reality is their bid is not far off that. It is unusual for there to be a change of control and someone to not pay a premium.”

Mr Waislitz, who hosted AGMs for Thorney Opportunities and Thorney Technologies, said Prime directors needed to weigh up the best interests of their shareholders and consider if there are other alternatives, including potentially sharing newsroom and advertising resources with ACM, which the pair acquired from Nine Entertainment Co for $115 million in July.

“We think there are certain assets in Prime that are attractive to our ACM. We would love to work closely with Seven on some of their assets and potentially some sharing.”

Meanwhile, Mr Waislitz said talk of the collapse of the LIC (listed investment companies) sector was premature and rejected the view it was “fundamentally flawed”, while signalling he was on the lookout for merger and acquisition opportunities.

“We think there might be some opportunities to look for those that have investments in a similar space, potentially common shareholders that we can perhaps look at acquiring or merging with.

“If there’s something appropriate that we can do a deal at the right price we will look at it.”

Waislitz said a shake-out in the LICs was a “good thing” and it “will result in the ‘wheat being sorted from the chaff’.”

Many LICs are trading at a discount to their net tangible assets, including those managed by Mr Waislitz.

“The discount … that most LICs are experiencing is usually the result of significant investment underperformance or a perception that previous outperformance won't be repeated.

“In fact it's been reported that more than 95 per cent of Australian LICs have underperformed the sharemarket over the past five years,” he said.

“Neither TEK nor its sister LIC Thorney Opportunities fit into that category. They have both consistently and substantially outperformed the sharemarket since their inception and I contend that they will continue to do so.”

With the federal government signalling a big round of infrastructure spending, Mr Waislitz said he was on the hunt for investment opportunities in the sector.