Anchorage Capital Partners’ shock withdrawal

By Glenn Dyer | More Articles by Glenn Dyer

Private equity group Anchorage Capital Partners has stunned investors, including ARN, with its shocking decision to drop out of the bid for Southern Cross Austereo. This move will likely kill the $250 million offer.

The Financial Review reported yesterday that the decision to abandon its partnership with ARN was conveyed over the weekend. This news led ARN’s board and management to meet all day Sunday in an attempt to salvage the bid, which was first revealed last October and then sweetened in March.

Southern Cross shares closed at 94 cents on Friday, down from the $1.05 they hit last October after the first offer from ARN and Anchorage was revealed.

If Anchorage’s withdrawal is confirmed and the deal cannot be saved, then Southern Cross shares will likely plunge, possibly falling well under the 73 cents they were trading at before the first offer was announced.

The proposal centered around a plan to take over SCA and then redistribute their existing station networks between ARN and Anchorage. This would ensure that ARN would not fall foul of the two-station-per-market rule, while also giving them the two stations in each major market that they currently lack, but SCA possesses.

However, it seems that this swap is no longer viable according to the original terms. Additionally, a TV joint venture between WIN and Seven West Media in the Mildura area of northwestern Victoria will see the Ten signal no longer broadcast in the area. This, in turn, impacts the value of the Southern Cross Regional TV sales business, which was part of the asset swap, according to media reports Sunday night and Monday morning.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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