Refinanced on Friday, a structured $131.9 million takeover play on Monday, plus a small million asset play as well, Kerry Stokes’ Seven West Media is back in play after two years of hacking, slashing and battling to survive.
Last week’s refinancing of the company’s $240 million debt with the banks (which had been cut from nearly three quarters of a billion 18 months earlier) allows it greater freedom to borrow, pay dividends and other capital management.
And do deals, as it did on Monday, announcing plans to buy the assets of its NSW regional affiliate Prime Media Group in a deal that while costing a headline figure of just on $132 million, would actually cost just $72 million, according to Seven.
Seven proposes to buy the assets of Prime Media Group, leaving it with the cash, which it will then share in. It is not bidding for Prime Media Group, which will remain a listed company.
With $10 million on hand, the cost to Seven on completion will be $121.9 million.
PRT will distribute net cash on hand to shareholders via a combination of franked dividends or capital return.
“Including cash acquired, SWM’s share of expected PRT distributions, and excluding transaction costs, SWM’s net investment in the PRT (Prime) Business is expected to be approximately $72 million, Seven West explained in its statement.
The news saw Prime soar more than 80% to a high of 43c. They closed at 40 cents, up 74% on the day Seven West shares were up nearly 15% to 52 cents.
“The proposed transaction is highly attractive for shareholders of both [companies]”, Seven said in its Monday morning ASX release.
Seven’s CEO James Warbuton said the proposal is an ‘important step’ for the two companies. “It means we will be able to give advertisers easy and seamless access via a single platform to capital city and regional markets,” he said.
Seven estimates the acquisition would generate between $5 million and $10 million in cost savings annually.
Seven first attempted to acquire Prime in 2019. The group was blocked by then shareholders Anthony Catalano and Bruce Gordon who seem to have greenlighted the latest deal.
This acquisition will be subject to a vote by the Prime Media Group shareholders next month. Seven said the decision is supported by major Prime’s board directors as well as shareholders who own 43.5% of the company.
The sale will generate a 36¢ dividend for shareholders, including a fully franked dividend of 26¢.
Prime Media Group has only paid one dividend in the past four years – a 2c final dividend plus a 3c special cash dividend in September 2021.
Seven is also taking a stake in an about to float company called CarExpert.
