Audio specialist SCA, poised to takeover television network and publisher Seven West Media, considered a number of offers before settling on the current deal.
The deal, giving SCA shareholders the majority holding in a combined group, creates a media group with free-to-air television, streaming, audio, digital and publishing assets.
The merged group will have combined revenue of $1.777 billion and a market capitalisation of $417 million.
“We have been approached on multiple occasions,” said SCA chair Heith Mackay-Cruise, who will replace Seven West chair Kerry Stokes.
“We looked at a number of them very seriously and gave due diligence to a number of them.
“But they fell through from an execution perspective.”
Mackay-Cruise said SCA had been working on a tie up for the last two years.
“But the point of difference today is the Seven West media deal we think adds better value to our shareholders than the previous ones,” he said during a company organised video interview.
“Strategically, it has the breadth of media assets to really deliver on shareholder and advertiser growth potential.
“It gives us financial strength … much better financial platform to actually improve our shareholder earnings per share.
“And (it gives) the opportunity for our talent and our staff to be involved in one of Australia's largest media companies.”
The deal comes with zero premium for Seven shareholders, according to analysts. Their upside is dependent on the performance of the merged entity.
“The customary benefits of the merger are convincing in theory (cross-media synergies, scale, cost-outs),” Brian Han of Morningstar wrote in a note to clients.
“But they have historically been illusory or obliterated by structural influences.”
Analysts at Morgan Stanley said media industry consolidation can help but it's no magic wand to fix the structural pain of traditional media.
“We have written for a long time that further media industry consolidation needs to happen, without it, there may be no ‘terminal value’ in these assets,” the analyst said.
“But consolidation alone won't solve the negative structural issues. There needs to be more strategic change and significant restructuring, in our view.”
Mackay-Cruise said the last significant media merger was about seven years ago, between Nine and Fairfax.
“And while there have been other activities, nothing more significant than this,” he said.
“We have quoted $25 to $30 million in cost synergies over the next 12 to 18 months from completion.
“We're expecting completion in the first quarter of calendar 2026 and naturally those costs come from not having two publicly listed companies. One entity, you have one board … one senior leadership team.
“We don't expect to be impacting in any way, shape or form, our talent, our front of house or our production teams from the point of view of show production.
“But naturally that creates a significant opportunity for talent and for our staff, as much as it does for our advertising community, which is key.”
Mackay-Cruise said advertising would be the winner.
“Both businesses focus on 25 to 54-year-olds, male and female,” he said. “That is where the most advertising dollars are.
“That is the sweet spot for both businesses, and we become the one stop solution for advertisers in Australia.”
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