Southern Cross makes takeover bid on rival Austereo

31 January 2011

After weeks of speculation, Southern Cross Media has made a takeover bid of radio rival Austereo Group Ltd. which will see them become Australia’s largest media group, if successful.

In an exchange that could be worth up to $741.3 million, Southern Cross, who own a network of regional radio stations, made an offer this morning of $2.05 a share (it last traded at Friday at $1.80) to Austereo shareholders to secure controlling interest that owners Village Roadshow are hoping to offload.

Shareholders can opt for a $2 per share cash plus a 5-cent divendend or a 0.95 share in Southern Cross Media plus the dividend.

Austereo's directors have recommended current shareholders accept the current offer.

According to The Australian, Southern Cross chairman Max Moore-Wilton said shareholders would “benefit from being part of a larger group that has significant opportunities for cross fertilisation and strong cash generation”.

Rhys Holleran, Southern Cross’ chief executive, added: “We see real potential to offer our premium content across a national platform and apply capabilities in metro radio to enhance our local radio offering.”

Snapping up Austereo would be a huge win for Southern Cross and have a huge impact on the Australian radio landscape. Austereo own the Today and Triple M FM radio networks, Perth’s Mix, Newcastle’s KOFM and NXFM, Canberra s FM104 and digital stations Radar, Barry and Main Stage.

At end of survey last year, it was #1 FM in Sydney (with 2DayFm), Melbourne (FOXFM), Brisbane (B105) and Perth (Mix) as well as #2 in Adelaide (SAFM) and #1 in Canberra and Newcastle. In addition to its on-air results, the company also enjoyed a record year for its increasing online offering, with unique visitors up 25% to over 1.2 million and video streams up 135% to 1.4 million a month.

Last financial year, Austereo earned $80.6 million EBIT (earnings before interest and taxes) and boasted sales revenue of $260.2 million, up 2.1% on 2009.

The takeover must first be approved by the Australian Competition and Consumer Commission (ACCC) and the Australian Communications and Media Authority (ACMA) before it’s allowed to proceed. The ACCC is expected to issue a timeline for the process shortly.