Seven West Media Limited (ASX: SWM) has announced that it has entered into a Scheme Implementation Deed (SID) with Southern Cross Media Group Limited (ASX: SXL, “SCA”) in relation to a proposed merger between the parties.
Highlights
- The Proposed Merger will establish a leading integrated media company with extensive scale and reach across metropolitan and regional Australia
- Combines two highly complementary businesses with strong positions in the Australian advertising market across their free-to-air television, streaming, audio, digital and publishing assets
- The combined business will be strongly positioned to attract and grow high value audiences (25–54), delivering revenue and earnings growth and unlocking significant shareholder value
- Under the Proposed Merger, SWM shareholders will receive 0.1552 SCA shares for every SWM share, which would result in SWM shareholders and SCA shareholders owning 49.9% and 50.1% of the combined business, respectively
- SWM and SCA management anticipate between \$25–30 million annual pre-tax cost synergies, with incremental revenue synergies also expected to be created
- The Proposed Merger will be effected by way of a SWM scheme of arrangement, with the unanimous recommendation of the SWM Board
- The Proposed Merger is consistent with SWM’s stated strategic position of being in support of media consolidation in Australia
In recommending the proposal, the Chairman of SWM, Kerry Stokes AC, said:
“The combination of these two companies brings together the best creators of media content in the country, delivering significant financial and strategic benefits for SWM shareholders. This is an important merger, as the combined company will be better able to serve both metropolitan and regional viewers, listeners, partners and advertisers. It will add strength to each of the combined businesses’ television, audio, digital and publishing operations across the country.”
Jeff Howard, Managing Director and CEO of SWM, added: “This combination marks a pivotal moment for Australian media. By bringing together the complementary assets and brands of SWM and SCA, we are creating a truly national, diversified media organisation with extensive scale and reach across our free-to-air television, streaming, audio, digital and publishing assets.”
Heith Mackay-Cruise, Chairman of SCA, said: “This merger will create one of Australia’s leading Total TV, Audio and Digital platforms, with the scale, reach and diversification to better serve Australian audiences and communities. The combination of SCA’s and SWM’s leading brands on broadcast, audio and digital platforms establishes national leadership across the critical 25–54 ‘audience that matters’ demographic. The merged entity will offer partners and clients a ‘one stop shop’ for opportunities to reach this valuable audience across all mediums, leveraging shared content and commercial opportunities to add value beyond the initial cost synergy estimates.”
As diversified media companies, SWM’s and SCA’s joint preliminary synergy assessment has identified annual pre-tax cost synergies of $25–30 million, to be realised within 18–24 months post completion. These synergies comprise the reduction of shared corporate overheads and operating expense duplication and facility rationalisation. Additionally, SCA and SWM have jointly explored the opportunity for revenue synergies by enhancing audience reach and advertising scale. Further work continues to examine potential revenue synergy quantification and structure an integration plan to bring the best of both companies together.
SWM and SCA have agreed that Jeff Howard will be the Managing Director and CEO of the combined group and John Kelly will assume the role of Group Managing Director, Audio. Kerry Stokes AC will assume the role of Chair of the Board of Directors until stepping down from the Board in February 2026 and transitioning the role to Heith Mackay-Cruise. Following this the combined Board will comprise four representatives from the SWM Board (being Teresa Dyson, Jeff Howard, Michael Malone and Ryan Stokes AO), and three representatives from the SCA Board (being Heith Mackay-Cruise, Marina Go and Ido Leffler). Mr Leffler has indicated his intention to continue on the combined Board through the acquisition and retire from the Board as at 30 June 2026.
The Chairman of SWM, Kerry Stokes AC said: “Following the improved performance of Southern Cross Media since Heith Mackay-Cruise assumed the Chairmanship, I have every confidence Heith will continue to guide the combined group successfully. Following my retirement from the Board in February 2026 I intend to continue to support the Chair and Board wherever I can add value.”
Further details regarding the combined group’s executive team will be agreed at a later stage.
Transaction overview
Under the Proposed Merger, SWM shareholders will receive 0.1552 SCA shares for every SWM share they own. Following the Proposed Merger, SWM shareholders and SCA shareholders would own 49.9% and 50.1% of the combined group, respectively.
The SID is subject to customary conditions and regulatory approvals for a transaction of this kind (including ACMA, ACCC and ASX approvals), and the approval of SWM shareholders.
The SWM Board unanimously recommends its shareholders vote in favour of the Proposed Merger. SWM Directors have also unanimously confirmed that they intend to vote in favour of the transaction. The Board of SGH Limited (ASX: SGH) (SGH) has indicated it intends to vote its 40.2% stake in SWM in favour of the Proposed Merger.
SCA shareholders are not required to approve the Proposed Merger.
Strategic rationale and financial benefits
The combined business would create a leading integrated Total TV, Audio and Digital platform – strongly positioned to attract and grow high value audiences and deliver revenue and earnings growth, unlocking significant shareholder value by:
- Creating a leading integrated multi-media platform, delivering world-class content to national and local audiences through the combined power of linear and digital media channels (free-to-air television, streaming, audio, digital and publishing)
- Attracting and growing high-value audiences by combining extensive Total TV, Audio and Digital platforms with extensive reach across metropolitan and regional Australia
- Leveraging attractive digital video, audio and publishing content across the combined platforms, with the benefit of a cohesive content strategy that combines news, sports and entertainment under a single streamlined offering
- Creating a seamless and scalable solution for advertisers and agencies to connect attractive and monetisable audiences across all media, significantly improving campaign targeting, reach and efficiency
- Harnessing the power of scaled data and insights across platforms to drive cross promotion to accelerate growth in audiences and revenue
- Delivering operational leverage and financial strength, supporting the funding of organic and inorganic growth and capital management initiatives
- Realising $25m–30 million of cost synergies, and unlocking further cross-platform revenue synergies to deliver future upside
- Improving market scale, reach, financial profile, free float, liquidity, and investor relevance of the combined group over the medium term
Scheme Implementation Deed
SWM and SCA have entered into an SID, which sets out the terms and conditions on which SWM and SCA will now implement the merger, including the following conditions precedent:
- Regulatory approvals (including from ACMA, ACCC and ASX)
Approval by SWM shareholders of the scheme for the purposes of section 411 of the Corporations Act 2001 (Cth) - An independent expert appointed by SWM concluding that the Scheme is, and continues to be until the SWM vote, in the best interests of SWM shareholders
- An independent expert appointed by SCA concluding that the Scheme is, and continues to be until the Southern Cross Fiduciary Right Date as defined in the SID, in the best interests of SCA shareholders
- Change of control consents from SWM’s lenders under its existing finance facilities
Court approval - New SCA shares must be approved for quotation on ASX
- No SWM or SCA material adverse change (as defined in the SID)
- Other customary conditions for a transaction of this nature, such as no prescribed occurrences and no other regulated events
Indicative next steps and Timetable
A Scheme Booklet containing information in relation to the Proposed Merger, reasons for the SWM directors’ recommendation, an Independent Expert’s Report which considers the Proposed Merger from the perspective of SWM shareholders and details of the Scheme will be sent to SWM shareholders, in the coming weeks. An Independent Expert’s Report which considers the Proposed Merger from the perspective of SCA shareholders will be also made available to SCA shareholders. The Scheme Meeting, at which SWM shareholders will vote on the proposal, is expected to be held once the required regulatory approvals are received, expected no later than Q1 CY2026.
Advisers
SWM is being advised by Barrenjoey Capital Partners as financial adviser and Herbert Smith Freehills Kramer as legal counsel. SCA has retained USB Securities Australia Limited as financial adviser and Corrs Chambers Westgarth as legal adviser.
Visit https://www.sca.com.au and https://sevenwestmedia.com.au