The company is proposing a merger with Prime Media ((PRT)) through a scrip-based arrangement. Each Prime Media shareholder will receive 0.4582 in Seven West shares.
While UBS is yet to factor in the announcement, given the outstanding approvals that are required, the combined impact of the merger and the divestments of Redwave Media is assessed to have only a negligible impact on short-term earnings.
Once the full amount of cost synergies is factored in, UBS calculates pro forma accretion of 6%.
The company has also confirmed there is no change to existing guidance for TV advertising markets, expecting a low single-digit decline in FY20. Buy rating and $0.50 target maintained.
Sector: Media.
Target price is $0.50.Current
Price is $0.40. Difference: $0.10 – (brackets indicate current price is over target). If SWM meets the UBS target it will return approximately 20% (excluding dividends, fees and charges – negative figures indicate an expected loss).
