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Seven and Prime surge on buyout

Seven West Media shares surged almost 15% on Monday after the company announced it will acquire Prime Media Group (ASX: PRT).

Seven said it strongly believes a combined business will create a leading commercial premium broadcast, video and news network across Australia, reaching more than 90% of the Australian population every month.

Seven determined the value of the Prime business at a premium for control, net of cash adjustments at a bid price of 36 cents for a market cap of $131.9 million. The figure represents a 57% premium to the closing PRT share price on October 29.

PRT shares hares closed 74% higher at 40 cents on Monday.

Including the net cash acquired, Seven’s share of expected PRT distributions, and excluding transaction costs, Seven’s net investment in the business is expected to be approximately $72 million, reflecting a multiple of approximately 2.9x EV/FY21 EBITDA.

Prime indicated that its Board already intends to unanimously recommend that PRT shareholders vote in favour of the proposal in the absence of a superior proposal and subject to an independent expert concluding that the proposed transaction is in the best interests of PRT shareholders. Major shareholders of PRT representing 43.5% of shareholders have indicated their support.

SWM Managing Director and Chief Executive Officer, James Warburton, said: “This proposal is an important step forward for both companies. SWM and PRT are great partners and have a long, successful relationship. The proposed transaction is an exciting and transformative development for advertisers and media buyers. It means we will be able to give advertisers easy and seamless access via a single platform to capital city and regional markets.”

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