Prime Media Group chairman John Hartigan will proceed with a vote this week for a desired merger with Kerry Stokes’ Seven West Media despite knowing it is doomed to fail after two heavyweight shareholders “hijacked” the deal.
Australian Community Media executive chairman Antony Catalano and WIN TV owner Bermuda-based billionaire Bruce Gordon will vote against the deal on Thursday when shareholders meet about the planned $64 million tie-up.
Interests associated with Mr Catalano and business partner Thorney Investment Group billionaire Alex Waislitz have 14.57 per cent of shares while Mr Gordon has a 19.5 per cent interest and 11.6 per cent worth of votes.
Neither Mr Catalano, who is on holiday in Bali, nor Mr Gordon will attend the vote in person.
Mr Hartigan said Prime believed it was “very important that all shareholders are afforded the opportunity to vote irrespective of the two large shareholders who have stated their intentions to vote against the scheme”. Prime would incur a $600,000 break fee if it pulled the deal ahead of the vote.
“In the event it is voted down it will be a great shame for the many retail investors who understand the competitive headwinds and earnings trajectory,” Mr Hartigan said.
“Instead the vote will have been hijacked by two investors with entirely different agendas. Should the vote fail, it will be business as usual – noting the continued and increasing competitive pressures from unregulated digital platforms.”
However, Mr Catalano hit back at this claim saying it was “a bit rich at this stage to make that accusation when the deal hasn’t gone that way the board expected”.
“Maybe, rather than being accused of hijacking the deal, Alex Waislitz and I, and separately Bruce Gordon, and potentially many other shareholders agree with Prime’s independent expert who concluded the deal was ‘unfair’,” he said.
A report from Lonergan, Edwards & Associates provided to shareholders by the regional broadcaster described the offer as “reasonable” but described the price as “unfair”.
“Given that the board unanimously accepted the ‘unfair’ deal and the likelihood is it will now be rejected by the very shareholders they represent then we all know what the appropriate course of action is for certain people,” Mr Catalano said.
He further said the regional broadcaster could “branch out” without the merger,including taking advantage of new revenue opportunities, potentially involving his own newspaper business.
“Partnership deals, digital sales, investments and regional media collaboration are just some of the options that it now has to explore.”
Prime, Mr Catalano and Mr Gordon have been aligned in calling for the government to overhaul the regulations that restrict consolidation among regional media businesses.
But Communications Minister Paul Fletcher told The Sydney Morning Herald and The Age last week that there were “very significant changes to the regulatory framework just a few years ago that allow … mergers between metropolitan and regional broadcasters”.
Mr Catalano said that previous media law changes had failed to support regional publications, adding that when Rural Press was bought by Fairfax Media the division still suffered.
“I don’t believe the interest of regional media companies will be best served by being owned by the big metro media companies,” he said.
“In the meantime, Mr Fletcher is saying he’s prepared to sit back and watch regional media companies struggle and potentially collapse because the government won’t extend them the same merger opportunities to regional media companies as it did to metropolitan media companies.”
Seven chief executive James Warburton said in a statement that the Prime Board and institutional shareholders had expressed the benefits of consolidation, which include a minimum $11 million in annualised synergies and exposure to a larger media group.
Seven and Prime agreed to a special dividend of 3c per share to try and encourage a favourable vote, which was supported by shareholders Regal Funds Management and Spheria Asset Management but was not enough to tempt Mr Catalano nor Mr Gordon.
“As indicated by Prime itself, status quo would represent a disappointing outcome for Prime shareholders,” Mr Warburton said.
Source: Thanks smh.com