Seven West Media Scheme Offers 0.1552 Southern Cross Shares per Seven Share

Background and Proposal

Seven West Media Limited (ASX – SWM) shareholders are set to vote on a proposed scheme of arrangement that would see Southern Cross Media Group Limited (ASX – SXL) acquire all issued shares of Seven. Under the terms of the scheme, Seven shareholders will receive 0.1552 new Southern Cross shares for each Seven share they hold, resulting in a combined entity where Seven shareholders own approximately 49.9% and Southern Cross shareholders 50.1%.

The Seven board has unanimously recommended that shareholders vote in favor of the scheme, subject to the absence of any superior proposal and the Independent Expert continuing to conclude that the scheme is in the best interests of shareholders. The Independent Expert, Lonergan Edwards & Associates, has indeed concluded that the scheme is favorable for Seven shareholders.

Strategic Rationale and Synergies

The merger aims to combine two complementary media businesses with strong positions across free-to-air television, streaming, audio, digital, and publishing assets. The combined group is expected to create a leading integrated media platform with enhanced scale and reach across metropolitan and regional Australia.

Seven and Southern Cross anticipate delivering $25 million to $30 million in annual pre-tax cost synergies within 18 to 24 months post-implementation. These synergies are expected to arise from reductions in duplicated corporate overheads, back office and corporate services, improved unit economics, efficiencies in systems and processes, and consolidation of property footprints.

Beyond cost savings, the combined entity is expected to unlock revenue synergies by leveraging cross-platform audience reach, data insights, and advertising scale, although these revenue synergies have not yet been quantified.

Regulatory and Shareholder Approval Process

The scheme is subject to several conditions precedent, including approval by the requisite majorities of Seven shareholders at the scheme meeting scheduled for 22 December 2025, court approval, and regulatory clearances from the Australian Competition and Consumer Commission (ACCC) and the Australian Communications and Media Authority (ACMA). The ACCC’s findings are expected by 18 December 2025, and any delay in regulatory approvals may postpone the scheme meeting.

Shareholders who cannot attend the meeting in person are encouraged to vote by proxy. The Seven board and major shareholder SGH Limited, which holds a 40.2% stake, have indicated their intention to vote in favor of the scheme, subject to the same conditions.

Financial and Market Implications

The combined group will have a pro forma market capitalization of approximately $423 million and is expected to benefit from improved financial scale, liquidity, and investor relevance. The merger is also anticipated to enhance the combined entity’s ability to invest in growth initiatives, including digital platforms and content creation, to compete effectively in the evolving media landscape.

Seven’s standalone outlook remains uncertain amid structural challenges in traditional broadcast television advertising, with competition from international digital content giants. The merger offers a pathway to greater scale and diversification, potentially improving shareholder value and dividend prospects.

Risks and Considerations

Key risks include the successful integration of the two businesses and realization of anticipated synergies, regulatory approval uncertainties, and fluctuations in Southern Cross’s share price, which will affect the value of the scheme consideration. Shareholders should also consider tax implications and the possibility that a superior proposal may emerge before the scheme meeting.

While the board recommends approval, shareholders are urged to carefully review the scheme booklet, including the Independent Expert’s Report, and seek independent financial and tax advice tailored to their circumstances.