ONE of media operator Kerry Stokes's media interests, West Australian Newspapers (WAN), has offered to buy another of his interests, Seven Media Group, for an enterprise value of $4.085 billion.
WAN said it would sell over $1 billion in new shares to help fund the transaction.
The new company would be called Seven West Media and would remain listed on the Australian Securities Exchange as the biggest Australian domiciled listed media company.
Seven Media Group is owned by the Stokes-controlled Seven Group and funds affiliated with private equity firm Kohlberg Kravis Roberts & Co and members of Seven's management.
Seven Group also is WAN's biggest shareholder, holding 24.3 per cent of the publisher.
Mr Stokes said under the proposed deal he would remain chairman of Seven Media and what would emerge would be a diversified media company involving newspapers, magazines, internet, television and multi-channelling.
The new company would be called Seven West Media and would remain listed on the Australian Securities Exchange as the biggest Australian domiciled listed media company.
Seven Media Group is owned by the Stokes-controlled Seven Group and funds affiliated with private equity firm Kohlberg Kravis Roberts & Co and members of Seven's management.
Seven Group also is WAN's biggest shareholder, holding 24.3 per cent of the publisher.
Mr Stokes said under the proposed deal he would remain chairman of Seven Media and what would emerge would be a diversified media company involving newspapers, magazines, internet, television and multi-channelling.
Mr Stokes said the new company would not see a merger of news rooms or a reduction in media competition, and that there were no plans for retrenchments of current employees.
"I think you will see two news rooms competing just as you do now.
"It's important they retain their competitiveness," Mr Stokes said.
Seven West would include all of WAN, including The West Australian, the state's biggest newspaper, and radio licences, all of Seven Network and all of Pacific Magazines.
Additionally, Seven West would own 49.9 per cent of Community Newspaper Group, 50 per cent of Yahoo!7, and 33 per cent of Sky News.
The independent directors of WAN said they would unanimously recommend shareholders approve the transaction.
Doug Flynn, one of WAN's independent directors and a former News Corp executive, said the takeover was an opportunity to transform WAN into a diverse media business.
"While WAN occupies an attractive niche as the leading media business in the West Australian market, it must look to the future," Mr Flynn said.
"Combining these two businesses will create a substantial and diverse combination of traditional and new media platforms to enhance WAN's ability to compete effectively in the ever changing media landscape."
WAN would buy Seven Media from Seven Group with $1.08 billion worth of its own shares, $250 million of convertible preference shares, $650 million repayment of a Seven Media loan owed to Seven Group and $2.104 billion of assumed external net debt.
WAN will raise $461 million through a placement of shares to KKR, $653 million from an entitlement offer of new shares and a further $40 million from a general public offer of shares.
The proceeds from the equity raising will be used to repay $450 million in debt, repay the Seven Group loan and pay transaction costs of $45 million, with the balance to be used for general corporate purposes.
The takeover is subject to Australian Competition and Consumer Commission approval.
Shareholders will vote on the deal on April 11.
As part of the transaction, Seven Group will sell its interest in WAN and not take up its entitlement under WAN's entitlement offer.
Seven Group then will receive $1.081 billion in WAN shares, equivalent to 29.6 per cent of the company.
Seven Group also would receive $250 million of the convertible shares, resulting in a total investment in WAN of about $1.33 billion.
WAN's existing board membership would remain and Seven Media's chief executive, David Leckie, would become Seven West's CEO.
Seven Group's chairman, Mr Stokes, said the transaction would transform WAN into the biggest listed Australian-domiciled media company.
"This transaction is an opportunity for Australian shareholders to gain exposure to some of the best media assets in Australia with the combined business leveraging the highly successful management teams," he said.
He added that Seven Group's commitment to the company was apparent because it will increase its interest in WAN at a higher price per share than WAN shareholders will pay under the entitlement offer.
Additionally, Seven West would own 49.9 per cent of Community Newspaper Group, 50 per cent of Yahoo!7, and 33 per cent of Sky News.
The independent directors of WAN said they would unanimously recommend shareholders approve the transaction.
Doug Flynn, one of WAN's independent directors and a former News Corp executive, said the takeover was an opportunity to transform WAN into a diverse media business.
"While WAN occupies an attractive niche as the leading media business in the West Australian market, it must look to the future," Mr Flynn said.
"Combining these two businesses will create a substantial and diverse combination of traditional and new media platforms to enhance WAN's ability to compete effectively in the ever changing media landscape."
WAN would buy Seven Media from Seven Group with $1.08 billion worth of its own shares, $250 million of convertible preference shares, $650 million repayment of a Seven Media loan owed to Seven Group and $2.104 billion of assumed external net debt.
WAN will raise $461 million through a placement of shares to KKR, $653 million from an entitlement offer of new shares and a further $40 million from a general public offer of shares.
The proceeds from the equity raising will be used to repay $450 million in debt, repay the Seven Group loan and pay transaction costs of $45 million, with the balance to be used for general corporate purposes.
The takeover is subject to Australian Competition and Consumer Commission approval.
Shareholders will vote on the deal on April 11.
As part of the transaction, Seven Group will sell its interest in WAN and not take up its entitlement under WAN's entitlement offer.
Seven Group then will receive $1.081 billion in WAN shares, equivalent to 29.6 per cent of the company.
Seven Group also would receive $250 million of the convertible shares, resulting in a total investment in WAN of about $1.33 billion.
WAN's existing board membership would remain and Seven Media's chief executive, David Leckie, would become Seven West's CEO.
Seven Group's chairman, Mr Stokes, said the transaction would transform WAN into the biggest listed Australian-domiciled media company.
"This transaction is an opportunity for Australian shareholders to gain exposure to some of the best media assets in Australia with the combined business leveraging the highly successful management teams," he said.
He added that Seven Group's commitment to the company was apparent because it will increase its interest in WAN at a higher price per share than WAN shareholders will pay under the entitlement offer.
