Seven West Media is to merge with regional affiliate Prime Media in a $63.8 million all-scrip deal that Seven West chief executive James Warburton has called a “game changer” for advertisers wanting to reach both regional and metropolitan Australia.
The ASX-listed duo have entered into a scheme implementation deed under which Prime shareholders will receive 0.4582 Seven West Media shares for each Prime share.
Prime’s board has unanimously recommended shareholders accept a deal that would leave them with 10 per cent of a company that Seven said on Friday would allow advertisers to reach more than 90 per cent of the country’s 25 million population each month on a single platform.
“The proposed transaction is a game changer for advertisers and media buyers and cements SWM’s position as the superior advertising offering,” said Mr Warburton, who will lead the combined entity.
“Overnight, SWM will be the leading wholly owned commercial premium network.”
The merger is expected to complete in January and to generate annualised cost synergies of $11 million through the removal or reduction of duplicated costs, consolidation of premises, and removal of Prime’s ASX listing costs.
Based on Seven West’s current share price, the deal values Prime shares at 17.4 cents each.
The shares were valued at 18 cents ahead of Friday’s open, but Prime’s board has recommended the scheme subject to an independent expert report concluding it is in the best interest of shareholders.
“It represents an exciting opportunity for Prime shareholders to maintain their exposure to the broadcast television industry in a stronger and larger combined group that is more relevant and resilient,” Prime chairman John Hartigan said.
The merger, which is subject to approvals from authorities including the competition watchdog and the Australian Communications and Media Authority, was made possible by media reforms under the Turnbull government.
The 2017 reforms removed a ban on a single entity controlling all three of TV, radio and newspaper in one licensed market, and repealed the so-called reach rule that prevented a proprietor controlling commercial television broadcasting licences across more than 75 per cent of the population.
Seven West has also agreed to sell WA radio network Redwave to Southern Cross for $28 million.