Broadcaster ARN Media must now sell down its holding in target SCA after being found to be in contravention of takeover rules.
The Takeovers Panel says ARN must vest 6.83% of the shares it acquired in SCA in corporate regulator ASIC so they can be sold.
Fund manager Allan Gray, from which ARN bought some SCA shares, must also sell within three months a further 0.08% of SCA shares.
The panel had last week ruled “unacceptable” how ARN acquired shares in SCA from Allan Gray.
ARN and Allan Gray say the contraventions of the rules were “inadvertent”.
ARN, backed by private equity firm Anchorage Capital Partners, in October launched a takeover bid for competitor SCA.
SCA shareholders are being offered 94 cents per share. The offer, valuing SCA at $330 million, is made up of 0.753 of an ARN share and 29.6 cents cash for each SCA share.
The breach of the rules goes back to the middle of this year when ARN Media acquired an interest of 14.8%, or 35,505,074 shares, in SCA for $38.3 million.
ARN then described the buy as a "strategic equity investment".
Those shares were acquired from Allan Gray, which also had 20.04% of ARN, and others.
As a result of the ARN acquisition, Allan Gray’s voting power in SCA, directly and through its ARN holding, increased to 31.24% from 21.71%.
This is well above the 20% rule. Section 606 of the Corporations Act prohibits the acquisition of a relevant interest in voting shares if a person's voting power increases from under 20% to more than 20%.
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