Broadcaster SCA has rejected ARN Media's latest takeover proposal.
SCA says it already has high quality radio and digital audio assets delivering the largest radio audience in Australia.
The original bid fell apart when private equity firm Anchorage Capital Partners, which was part of ARN's consortium, walked away from the deal, citing "continued decline" in the trading performance of regional TV.
ARN and Anchorage first made an offer in October last year, valuing SCA at $330 million, made up in part cash and part shares.
SCA said it was "frustrating" the consortium had withdrawn its proposal now when any material concerns should have been identified much earlier.
ARN then put up an alternative proposal to acquire SCA's assets.
SCA said the complexity of ARN's alternative proposal was "materially greater" than the original.
And it has now decided not to pursue the proposal. However, SCA remains open to considering proposals that would deliver fair value and be in the best interests of all SCA shareholders. The SCA board considers that the alternative Indicative proposal does not satisfy either of these requirements.
“The alternative proposal provides downside for SCA shareholders, even if the execution challenges could be overcome," said SCA chair Heith Mackay-Cruise.
“SCA is Australia’s largest commercial radio and fastest growing digital audio business. Under the alternative proposal, SCA shareholders would be left with a minority interest in an expanded ARN business and full ownership of sub-scale commercial radio assets and declining regional television assets, with limited exposure to the fastest growing media sector of digital audio, and with no cash in return.
“Over seven months of engagement, the Consortium was unable to deliver its original proposal in an executable form. The SCA Board does not believe transferring that complexity, value and execution risk to SCA shareholders is in their best interests.”
SCA says costs associated with the consortium’s proposal are expected to be between $4 million and $5 million.
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