An independent report by Kroll Australia has found the Southern Cross Austereo–Seven West Media merger to be fair, sparking debate among shareholders.
An independent report has given the proposed Southern Cross Austereo and Seven West Media merger the green light, describing it as fair and in the best interests of shareholders — despite growing criticism from some investors who won’t get a say in the deal.
Risk advisory firm Kroll Australia, hired by Southern Cross, found that the $420 million all-scrip merger “is in the best interests” of shareholders and offers both companies a stronger, more diversified media portfolio.
Kroll’s assessment said the merger could help the combined business “withstand structural shifts in the advertising market and mitigate the impact of cyclical downturns in any single market.”
Other expected advantages include “improved negotiating power with suppliers and customers” and a broader offering to advertisers through a stronger national footprint.
Under the proposed terms, Seven shareholders will receive 0.1552 Southern Cross shares for each Seven share they hold. The result would see Southern Cross investors owning 50.1% of the new entity and Seven investors 49.9%.
Kroll estimated Southern Cross’s contribution to the combined group would sit between 46.7% and 47.3% in underlying value, falling within what it considered a fair range of 42.2% to 51.9%.
The firm concluded that the deal was “fair, reasonable and in the best interests of Southern Cross shareholders in the absence of a better offer.”
“The Kroll valuation to us would seem to materially undervalue the company as it stands today, which corresponds to what [SCA] directors say they think about the company,”
said Sandon Capital founder and managing director Gabriel Radzyminski, whose firm holds about 11.3% of Southern Cross stock.
Radzyminski has been one of the deal’s most vocal critics, arguing the merger undervalues the radio company and moves it away from its “all about audio” strategy launched in 2023.
“We think audio is far more attractive than free to air television and print media, and as a Southern Cross shareholder, we don’t see the benefit in exposing ourselves to free to air television and print media,”
he said.
The merger, if approved by regulators and Seven shareholders, would create Australia’s largest cross-platform media company since Nine Entertainment merged with Fairfax in 2018.
Southern Cross, which owns the Triple M and Hit radio networks as well as the LiSTNR app, would combine with Seven West, which owns the Seven TV network, The West Australian, The Sunday Times, community newspapers, and online outlet The Nightly.
In Kroll’s analysis, the merged entity would deliver earnings per share of 17.2 cents in FY25, compared to Southern Cross’s standalone earnings of 6.3 cents. However, the report warned that transaction costs could weigh on short-term results before cost savings take effect.
Southern Cross and Seven have previously forecast between $25 million and $30 million in annual cost savings from shared functions, real estate, and other efficiencies — figures Kroll described as “conservative” and “reasonable.”
In his first interview since the merger was announced on 30 September, Southern Cross chair Heith Mackay-Cruise defended the process, saying the board followed all requirements and went further to protect shareholder rights.
“We did not need any approval from the ASX. We didn’t ask for a waiver. We didn’t need it. But we put in two additional mechanisms to support shareholder rights – both the independent expert report that has confirmed [the merger] is fair and reasonable and in [shareholders’] best interests, and secondly, the fiduciary carve-out,”
Mackay-Cruise said.
That “fiduciary carve-out” allows Southern Cross to back out of the deal if a better offer emerges within four weeks of the report’s release.
Mackay-Cruise said Seven was the right fit for Southern Cross, noting that both target the 25 to 54-year-old demographic and reach nearly the entire Australian population.
“These media assets reach 100 per cent of the Australian population. And secondly, both Seven West Media and [SCA] target the 25 to 54-year-old demographics, male and female,”
he said.
“We’ve said to the advertising community that by putting these together, we create a one-stop-shop solution for advertisers that are targeting 25 to 54-year-olds.”
The merger still requires regulatory clearance and is expected to be completed before 2 December 2025, with Seven chair Kerry Stokes set to step down in February and Mackay-Cruise to lead the merged entity.
Either they merge or die.
7plus aren’t that entertaining expect for the cricket, since I can’t afford Kayo Sports.