Southern Cross Austereo (SCA) shareholders have been handed a green light on the proposed Seven deal, with an Independent Expert Report (IER) concluding the merger is in their best interests – and fair on both valuation and structure.
Released to the ASX this morning, the report positions the tie-up as a “merger of equals”, rather than a control move, and finds the share split reflects each party’s underlying equity contribution.
It also notes the combined entity’s scale, earnings profile and increased market relevance as key benefits.
IER says structure is balanced
The expert, engaged by SCA’s independent board committee, concluded the proposed ownership structure aligns with value contributed.
“We have assessed the Proposed Merger as a ‘merger of equals’,” the report states.
“The proposed proportionate ownership in the Combined Group that will be held by Southern Cross Shareholders falls within the range of the ratio of underlying equity value contribution.”
On valuation alignment, the report notes the indicative value held by SCA shareholders post-transaction exceeds the value contributed, making the deal “fair” under two assessment methods:
• Relative equity value contribution.
• Value of the Combined Group shares..
It also highlights that the deal allows SCA shareholders to participate in earnings accretion generated by the Combined Group, subject to delivery of synergies and macro conditions.
On financial uplift, the IER points to both cost and scale advantages.
Combined FY25 revenue is forecast at $1.96 billion, with $233 million EBITDA pre-synergies, and net assets of $394 million.
Cost synergies are estimated at $25m–$30m annually (pre-tax), targeted within 18–24 months of completion.
The report says SCA shareholders will benefit from “exposure to a larger, more diversified asset base with greater earnings and financial flexibility,” with improved capacity to fund digital platforms, content creation and technology investment, albeit tempered by higher leverage.
Free float and liquidity are expected to lift under the combined structure, which the expert says could attract greater broker coverage and institutional interest.
The report notes scale remains a meaningful driver of trading multiples across listed media stocks.
The IER is a required step ahead of shareholder voting. The scheme booklet and timetable remain pending.
Regulators will continue to assess competition dynamics, particularly in regional markets and audio, though the “merger of equals” structure and diversified asset mix are expected to remain central to arguments supporting scale.