Seven Group Holdings becomes a reality

Yesterday the Federal Court of Australia approved the schemes of arrangement for the proposed merger between Seven Network Ltd and WesTrac Group. Therefore paving the way for Kerry Stokes to emerge with a 68 per cent majority stake in the new company to be called Seven Group Holdings (SGH).

Federal Court approval by Justice Peter Jacobson followed last week’s approval of the schemes by Seven Network Ltd shareholders (excluding Mr Stokes as he is a related party and therefore was unable to vote). A majority of 88.78% of votes and 69.27% of holders voted in favour of the merger.

FrostGlobal.com has reported previously on the proposed merger which sees the publicly listed Seven Network Ltd (ASX Code: SEV)¬ merging with Stokes’ privately owned WesTrac.

Seven Network Ltd has a 47 per cent stake in Seven Media Group, whose assets include Seven’s TV stations, Pacific Magazines and a 50 per cent stake in Yahoo!7. Seven Network Ltd own other media assets including a 22% stake in Consolidated Media Holdings, 11% stake in Prime Media and 23 per cent of West Australian Newspapers.

Source: Seven Group


Meanwhile, WesTrac is the exclusive franchisee of Caterpillar Equipment in WA, NSW/ACT and North Eastern China. WesTrac also owns stakes in Coates Hire and Allight.

Justice Jacobson in approving the merger schemes said, “There’s nothing to suggest that the unrelated shareholders or the TELYS3 holders voted otherwise than in good faith, or they cast their vote for any improper purpose. The test of reasonableness appears to be satisfied.”

In response to the Federal Court’s decision, Mr Stokes said “it is excellent news that the merger can now go ahead, following court approval and the strong support of Seven shareholders last week. Our key objective for SGH will be to drive long term shareholder value creation and to ensure the numerous growth opportunities available to the combined group are executed for the benefit of all shareholders.”

Following the Federal Court approval, Seven Network Ltd plans to lodge with ASIC tomorrow the approved Court Orders. This will result in a suspending of trade for Seven Network Ltd shares until 14 May 2010 when Seven Group Holding (SGH) shares will begin trading on a normal basis, according to Seven’s press release.

More information on key dates can be found on Seven Group Holding’s website.

The news of the shareholder approval will create a new corporate conglomerate in the Australia media and mining services industries with Kerry Stokes sitting at the top.

The new company looks like expanding its holdings even before hitting the market. Consolidated Media Holdings (ASX Code: CMJ) announced last Friday a $225 million share buy back scheme. If Seven Group Holdings and James Packer does not participate in the buy back pursuant to s257C Corporations Act, SGH along with Packer will increase their respective holdings. According to the Australian newspaper participation by both CMH’s largest shareholders is unlikely.

The market though will have to wait until 14 May 2010 to see how new investors take to the “diversified operating investment group”.

Sources: Seven Group, CMH, the Australian

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