The two companies announced on Friday that Seven will make the acquisition entirely through the issue of new shares to the owners of Prime. Both companies are currently listed on the Australian Stock Exchange. The deal is valued at A$63 million (US$43 million) and is subject to shareholder approval in December. Completion would take place in early 2020.
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Prime is currently an affiliate broadcaster for Seven and the deal, styled as a merger, is expected to lead to an annual A$11 million (US$7.5 million) of cost savings, superior opportunities for advertisers, and free up resources for investment in content and digital delivery. The combined businesses will be led by James Warburton, Seven’s new MD and CEO, with the company chaired by Seven chairman Kerry Stokes.
Seven is engaged in a long term battle to reduce costs, cut debt and streamline its operations. For the 2018-19 financial year it recorded a statutory loss of A$434 million (US$296 million) and finished the year with net debt of A$565 million (US$386 million).
At the same time as the all-paper acquisition, Seven says it has agreed to sell its Western Australian radio businesses to Southern Cross Media, for A$28 million (US$19.1 million).
“The proposed transaction is a game changer for advertisers and media buyers and cements SWM’s position as the superior advertising offering. SWM will be the leading wholly-owned commercial premium offering that amasses a monthly Australian audience of 18 million people,” said Warburton in a statement.
Australian media has been squeezed by high legacy costs and the arrival in force of online giants. Corporate responses to this have included the sale of Ten Network to the U.S.’s CBS in 2017 and last year’s takeover of the Fairfax newspaper group by broadcaster Nine.
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