Takeovers Panel Eases Voting Restrictions on Southern Cross Shares
The Takeovers Panel has introduced a gradual lifting of voting restrictions on ARN Media's 6.83% stake in Southern Cross Media, following Sandon Capital's push to influence board control.
- Panel varies orders restricting ARN Media's voting rights on 6.83% Southern Cross shares
- New mechanism allows incremental restoration of voting power every six months
- Variation responds to Sandon Capital's board spill resolutions at upcoming meeting
- Panel finds no material change but permits prospective easing of restrictions
- Voting restrictions to cease fully once cumulative shares regain voting rights
Background to the Voting Restrictions
Southern Cross Media Group Limited (ASX, SXL) has been subject to regulatory voting restrictions on a significant shareholding held by ARN Media Limited. These restrictions, imposed by the Takeovers Panel in early 2024, limited ARN's ability to vote approximately 6.83% of Southern Cross shares, aiming to prevent undue influence over the company's board and governance.
Sandon Capital's Push for Board Changes
Earlier this year, Sandon Capital Pty Ltd, a notable shareholder and activist investor, delivered formal notices signaling its intention to move resolutions to remove four directors from Southern Cross's board. This move intensified scrutiny on the voting restrictions, as Sandon sought to have ARN's restricted shares count towards these critical board spill resolutions at the upcoming general meeting.
Panel's Decision to Vary Orders
In response, the Takeovers Panel reviewed the existing orders and, while not convinced of any material change in circumstances to fully lift the restrictions, acknowledged the passage of time and the need for a mechanism to gradually restore voting rights. The Panel introduced a new order allowing 3% of the restricted shares to regain voting power every six months, effectively phasing out the restrictions over time in line with the so-called 'creep rule' under Australian takeover law.
Implications for Southern Cross Governance
This variation means that ARN Media will incrementally regain the ability to vote its shares, potentially influencing future board compositions and corporate decisions. The immediate impact is limited, as the restrictions remain in place for the upcoming meeting, but the easing signals a shift towards normalising shareholder rights and could embolden activist shareholders like Sandon Capital.
Looking Ahead
The Panel's decision balances regulatory caution with shareholder rights restoration, but the ultimate effect will depend on how ARN and Sandon Capital exercise their voting power in the months ahead. Market watchers will be keenly observing the next general meeting outcomes and any further moves by the Takeovers Panel.
Bottom Line?
The gradual lifting of voting restrictions sets the stage for evolving shareholder dynamics at Southern Cross Media.
Questions in the middle?
- Will ARN Media fully regain voting rights before the next Southern Cross general meeting?
- How will Sandon Capital's board spill resolutions fare with partial voting restrictions still in place?
- Could this phased approach to lifting restrictions become a precedent for other contested takeovers?
